What are few important aspects of the decision

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Reference no: EM1397515

Cost Planning- Gasoline Prices In June 2008 when gasoline prices were at an all-time high greater than $4 per gallon, Chrysler Motor Company endorsed its Jeep vehicle with the offer of either $4,500 off the price of the vehicle or the guarantee that the buyer wouldn't pay more than $2.99 per gallon of gas for the next three years (the details of the guarantee might vary by dealer).
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1. Presume that the Jeep vehicle you are interested in gets 15 mpg combined city/highway as well as that at the time of purchase you expected gasoline prices to average $5 per gallon over the next three years. How numerous miles would you have to drive the vehicle in the next three years to make the guarantee more attractive than the $4,500 discount?

2. Presume the same information as in part 1 above except the average price of gas for the next three years isn't known, however you are likely to drive 8,500 miles per year. What is the break-even gasoline price in the coming three years thus that you would be indifferent between the two options?

3. What are few important aspects of the decision that don't have to do with the price of gasoline as well as the $4,500 discount?
PS- This is a question around Cost-Volume-Profit Analysis

Reference no: EM1397515

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