CHAPTER 8-AUTOMOBILE TRANSPORTATION

1. CHAPTER 8-AUTOMOBILE TRANSPORTATION

2. PLEASE DO NOW…………. • Compute: • $7400 + $919 + $80 + $150 • $8500 + $3070 + $440 + $148 • $12,450 + $2196 + $319 + $297 • 5% x $12,400 • 6 ½% x $18,360

3. ANSWERS…………. • Compute: • $7400 + $919 + $80 + $150 $8549 • $8500 + $3070 + $440 + $148 $12,158 • $12,450 + $2196 + $319 + $297 $15,262 • 5% x $12,400 $620 • 6 ½% x $18,360 $1193.40

4. CHAPTER 8 GOALS • How do we purchase a new automobile? • How do we calculate Dealer’s Cost? • How do we purchase a used automobile? • How do we operate & maintain an automobile? • How do we lease an automobile? • How do we rent an automobile?

5. CHAPTER 8 BUSINESS MATH STANDARD(S) Achievement Standard: Use mathematical procedures to analyze and solve business problems for such areas as taxation; savings and investment; payroll records; cash management; financial statements; credit management; purchases; sales; inventory records; depreciation, cost recovery, and depletion.

6. DEFINITIONS to KNOW • Base Price • Sticker Price • Dealer’s Cost • Average Retail Price • Variable Costs • Fixed Costs • Depreciation • Closed-End Lease • Open-End Lease • Residual Value

7. 8-1 HOW DO WE PURCHASE A NEW AUTOMOBILE? • Automobile manufactures are required by law to place a sticker on the window of each new car to show all charges of the car. • The base price is the price of the engine, chassis, and anyother piece of standard equipment for a particular model. • Options are extras for convenience, safety, or appearance, such as radio, air-conditioning, and tinted glass.

8. 8-1 HOW DO WE PURCHASE A NEW AUTOMOBILE? (Continued) • The destination charge is the cost of shipping the car from the factory to the dealer. • The sticker price is the total of the base, options, and destination charge. Sticker Price= Base Price + Options + Destination Charge

9. LET’s PRACTICE Scott Huber is shopping for a sports car. A portion of the sticker for one that he is interested in is shown below. What is the sticker price for this coupe? Find the options. $145 + $490 + $120 + $610 + $195 + $93 = $1653 Find the sticker price. (Base Price + Options + Destination Charge) $11,495 + $1653 + $450 = $13,598 sticker price

10. 8-2 HOW DO WE CALCULATE DEALER’S COST? • Automobile dealers pay less than the prices on the sticker for both basic automobile and the options. • Various Internet sites report dealer’s cost as a percent of the sticker price. • You may save money when purchasing a new automobile by making an offer that is higher than the estimated dealer’s cost but lower than the sticker price. Dealer’s Cost= % of Base Price + % of Options Price + Destination Charge

11. LET’s PRACTICE Lisa and Tom Marker want to purchase a new Winsor Sedan. The car has a base price of $12,438, options totaling $2240, and a destination charge of $360. They read in a consumer magazine that the dealer’s cost for a Winsor is about 80% of the base price and 77% of the option’s price. What should they estimate as the dealer cost? Find the percent of base price. $12,438 x 80% = $9950.40 Find the percent of options price. $2240 x 77% = $1724.80 Find the dealer’s cost.(% of Base Price + % of Options Price + Destination Charge $9950.40 + $1724.80 + $360 = $12,035.20 dealer’s cost

12. QUESTIONS??? COMPLETE P.240-241 #1-10 in your textbook. COMPLETE P.242-243 #1-8 in your textbook. HW WB P.56

13. PLEASE DO NOW…………. • Compute: • $4000 + $500 + $50 - $200 = • $8000 + $250 + $475 - $125 = • $9500 + $75 + $25 - $100 = • $1250 + $125 + $75 - $75 - $75 =

14. ANSWERS…………. • Compute: • $4000 + $500 + $50 - $200 = $4350 • $8000 + $250 + $475 - $125 = $8600 • $9500 + $75 + $25 - $100 = $9500 • $1250 + $125 + $75 - $75 - $75 = $1300

15. 8-3 HOW DO WE PURCHASE A USED AUTOMOBILE? • Automobile dealers usually advertise used cars for prices that are higher than what they expect you to pay. • Used-car guides, published monthly, give the average prices for cars that were purchased from dealers during the previous month. • The information can help you make decisions about how much to pay for a used automobile. Average Retail Price= Average Retail Value + Additional Options – Options Deductions – Mileage Deduction

16. LET’s PRACTICE • Jackie Morris would like to purchase a Palamino Spirit, model I59, 2-door hardtop that is advertised for $5195. It has an AM/FM stereo radio and no air-conditioning. It has been driven 78,000 miles. The used-car guide indicates that $275 should be subtracted if the mileage is between 75,000 and 80,000 miles. What is the average retail price should Jackie keep in mind when she makes an offer for the car? Find the average retail price. $6175 + $100 - $500 - $275 = $5500 average retail price

17. 8-4 Automobile Insurance • Liability insurance protect you against financial losses if you car is involved in an accident. • Comprehensive insurance protect you from losses due to fire, vandalism, theft, and so on. • Collision insurance pays to repair the damage to your car if it is involved in an accident. • A deductable clause means you pay the first $ amount of the repair bill. • The annual base premium is determined by the amount of insurance you want, the age group of your car, and the insurance-rating group.

18. Continued • Annual Base Premium = Liability Premium + Comprehensive Premium + Collision Premium Annual Premium = Annual Base Premium X Driver Rating Factor

19. LET’s PRACTICE • Della Welch is the principal operator of her car. Her driver-rating is 2.20. Her insurance includes 50/100 bodily injury and $50,000 property damage. Her car is in age group A and insurance-rating group 13 (A, 13). She has a $50-deductable collision insurance. What is her annual base premium? What is her annual premium? Find the annual base premium. Liability Premium + Comprehensive Premium + Collision Premium = Annual Base Premium $237.20 $108.00$287.20 $632.40 Find the annual premium. Annual Base Premium X Driver-Rating Factor $632.40 2.20 = $1391.28 annual premium

20. QUESTIONS??? COMPLETE P.244-245 #1-10 in your textbook. HW WB P.57

21. PLEASE DO NOW…………. • Compute: • $180 x 1.20 = • $70 x 3.10 = • ($140 + $64) x 4.10 = • ($180 + $90.20) x 2.90 =

22. ANSWERS…………. • Compute: • $180 x 1.20 = $216 • $70 x 3.10 = $217 • ($140 + $64) x 4.10 = $836.40 • ($180 + $90.20) x 2.90 = $783.58

23. 8-5 HOW DO WE OPERATE & MAINTAIN AN AUTOMOBILE? • Variable costs, like gasoline and tires, increase as the number of miles you drive increases. • Fixed costs, like automobile insurance, registration fees, and depreciation, remain about the same regardless of how many miles you drive. • Depreciation is a decrease in the value of the car because of its age and conditioning. • Cost per mile = (Annual Variable Cost + Annual Fixed Cost)/Number of Miles Driven

24. LET’s PRACTICE Ann Kory purchased a used automobile for $4000 one year ago. She drove 9000 miles during the year and kept a record of all her expenses. She estimates the car’s present value at $3200. What is was the cost per mile for Ann to operate her car last year? Find the cost per mile. ($573.20 + $1261.65)/9000 = $0.203 or $.20 cost per mile

25. QUESTIONS??? COMPLETE P.250-251 #1-12 in your textbook. HW WB P.59

26. PLEASE DO NOW…………. • Compute: • 48 x $199 = • 36 x $175 = • 24 x $299.95 = • 9360 + 1200 + 125 + 60 =

27. ANSWERS…………. • Compute: • 48 x $199 = $9552 • 36 x $175 = $6300 • 24 x $299.95 = $7198.80 • 9360 + 1200 + 125 + 60 = $10,745

28. 8-6 HOW DO WE LEASE AN AUTOMOBILE? • When you lease an automobile, you make monthly payments to the leasing company, dealer, or bank for 2 to 5 years. • At the end of the lease, you return it or buy it out right. • Two types of leases: Closed-end lease and Open-end lease. • After leasing a car, the car has a residual value. Total Lease Cost= (# of Payments x Amount of Payment) + Deposit + Title Fee + License Fee

29. LET’s PRACTICE Ralph Dunn leased an S-10 pickup truck for use in his lawn care business, He pays $168.97 per month for 48 months. His deposit was $200. He paid a $40 title fee and a $15 license fee. What is the total lease cost? Find the total cost. Total of Payments: 48 x $168.97 = $8110.56 Deposit: 200.00 Title fee: 40.00 License fee: +15.00 Total Lease Cost: $8365.56

30. QUESTIONS??? COMPLETE P.253-254 #1-11 in your textbook. HW WB P.60

31. PLEASE DO NOW…………. • Compute: • $79 x 4 = • $15 x 8 = • $.24 x 500 = • $420 divided by 8000 =

32. ANSWERS…………. • Compute: • $79 x 4 = $316 • $15 x 8 = $120 • $.24 x 500 = $120 • $420 divided by 8000 = $0.0525

33. 8-7 HOW DO WE RENT AN AUTOMOBILE? Some automobile rental agencies charge a daily rate plus a rate per mile, while others charge a daily rate with no mileage charge. Plus, you have to pay for gasoline and insurance on the car. Cost per Mile= Total Cost/# of Miles Driven

34. LET’s PRACTICE Joe Wozniak rented a compact car for 3 days at $27.95 per day plus 20¢ per mile. He purchased the collision waiver for $10.00 per day. Joe drove 468 miles and paid $21.70 for gasoline. What was the total cost of renting the car? What was the total cost per mile to rent the car? Find the total cost. Daily cost: $27.95 x 3 = $83.85 Mileage cost: $0.20 x 468 = $93.60 Gasoline cost: $21.70 Collision waiver: $10.00 x 3 = $30.00 Total cost: $229.15 Find the cost per mile.(Total Cost/# of Miles Driven) $229.15/468 = $0.49 cost per mile

35. QUESTIONS??? COMPLETE P.255-256 #1-11 in your textbook. HW WB P.61