CHAPTER 8-AUTOMOBILE TRANSPORTATION
1
PLEASE DO NOW………….
Compute:
1. $7400 + $919 + $80 + $150
2. $8500 + $3070 + $440 + $148
3. $12,450 + $2196 + $319 + $297
4. 5% x $12,400
5. 6 ½% x $18,360
2
ANSWERS………….
Compute:
1. $7400 + $919 + $80 + $150
$8549
2. $8500 + $3070 + $440 + $148
$12,158
3. $12,450 + $2196 + $319 + $297 $15,262
4. 5% x $12,400
$620
5. 6 ½% x $18,360
$1193.40
3
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?
4
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.
5
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
6
8-1 HOW DO WE PURCHASE A NEW
AUTOMOBILE?
1.Automobile manufactures are required by law
to place a sticker on the window of each new car
to show all charges of the car.
2.The base price is the price of the engine,
chassis, and any other piece of standard
equipment for a particular model.
3.Options are extras for convenience, safety, or
appearance, such as radio, air-conditioning, and
tinted glass.
7
8-1 HOW DO WE PURCHASE A NEW
AUTOMOBILE? (Continued)
4. The destination charge is the cost of shipping
the car from the factory to the dealer.
5. The sticker price is the total of the base,
options, and destination charge.
Sticker Price= Base Price + Options + Destination Charge
8
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?
LAMONT 2-DOOR SPORT COUPE
C/C OPTIONAL EQUIPMENT DESCRIPTION
WP1
Rear Window Defogger
ATO
TG1
AC3
PDL
D84
Automatic Transmission W/ Overdrive
Tinted Glass
Air-Conditioning
Power Door Locks
Custom Two-Tone Paint
Destination Charge
BASE PRICE $11,495
LIST PRICE
145
490
120
610
195
93
450
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
9
8-2 HOW DO WE CALCULATE DEALER’S COST?
1.Automobile dealers pay less than the prices on
the sticker for both basic automobile and the
options.
2.Various Internet sites report dealer’s cost as a
percent of the sticker price.
3.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
10
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
11
QUESTIONS???
COMPLETE P.240-241 #1-10 in your textbook.
COMPLETE P.242-243 #1-8 in your textbook.
HW WB P.56
12
PLEASE DO NOW………….
Compute:
1. $4000 + $500 + $50 - $200 =
2. $8000 + $250 + $475 - $125 =
3. $9500 + $75 + $25 - $100 =
4. $1250 + $125 + $75 - $75 - $75 =
13
ANSWERS………….
Compute:
1. $4000 + $500 + $50 - $200 =
$4350
2. $8000 + $250 + $475 - $125 =
$8600
3. $9500 + $75 + $25 - $100 =
$9500
4. $1250 + $125 + $75 - $75 - $75 = $1300
14
8-3 HOW DO WE PURCHASE A USED AUTOMOBILE?
1.Automobile dealers usually advertise used cars
for prices that are higher than what they expect
you to pay.
2.Used-car guides, published monthly, give the
average prices for cars that were purchased from
dealers during the previous month.
3.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
15
LET’s PRACTICE
Jackie Morris would like to purchase a Palamino Spirit, model I59, 2door 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?
Av’g Trd.-in
Body type
PALAMINO – V8-AT-PS-VC
5375
4
H’dtp. 2Dr.
5325
4
H’dtp. “S”
5625
4
H’dtp. Sprt.
25
Add
Rear Window Defroster………………
100
Add
AM/FM Stereo………………………….
125
Add
AM/FM Stereo?Tp……………………..
100
Add
Cruise Control………………………….
100
Add
Power Door Locks……………………
100
Add
Power Windows……………………….
50
Add
Digital Dash…………………………….
75
Add
2-Tone Paint…………………………….
75
Add
Aluminum Wheels……………………..
75
Add
Tilt Strg. Wheel…………………………
125
Add
GT. Pkg…………………………………
425
Deduct
Manual transmission…………………..
500
Deduct
W/out Air-Cond………………………..
Model
I59
I59
159
Find the average retail price.
$6175 + $100 - $500 - $275 = $5500 average retail price
Av’g Loan
Av’g Ret’l
4850
4800
5075
25
100
125
100
100
100
50
75
75
75
125
425
500
6175
6125
6450
25
100
125
100
100
100
50
75
75
75
125
425
500
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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.
17
Continued
Annual Base Premium = Liability Premium +
Comprehensive Premium +
Collision Premium
Annual Premium = Annual Base Premium X Driver Rating
Factor
18
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
19
QUESTIONS???
COMPLETE P.244-245 #1-10 in your textbook.
HW WB P.57
20
PLEASE DO NOW………….
Compute:
1. $180 x 1.20 =
2. $70 x 3.10 =
3. ($140 + $64) x 4.10 =
4. ($180 + $90.20) x 2.90 =
21
ANSWERS………….
Compute:
1. $180 x 1.20 =
$216
2. $70 x 3.10 =
$217
3. ($140 + $64) x 4.10 =
$836.40
4. ($180 + $90.20) x 2.90 =
$783.58
22
8-5 HOW DO WE OPERATE & MAINTAIN AN
AUTOMOBILE?
1.Variable costs, like gasoline and tires, increase as the
number of miles you drive increases.
2.Fixed costs, like automobile insurance, registration
fees, and depreciation, remain about the same
regardless of how many miles you drive.
3.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
23
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?
Variable Costs
Gasoline
Oil Changes
Maintenance
New Tire
Fixed Cost
$345.24
71.85
$114.36
$41.75
$573.20
Insurance
License/registration
Depreciation
($4000-3200)
$385.40
76.25
$800.00
$1261.65
Find the cost per mile.
($573.20 + $1261.65)/9000 = $0.203 or $.20 cost per mile
24
QUESTIONS???
COMPLETE P.250-251 #1-12 in your textbook.
HW WB P.59
25
PLEASE DO NOW………….
Compute:
1. 48 x $199 =
2. 36 x $175 =
3. 24 x $299.95 =
4. 9360 + 1200 + 125 + 60 =
26
ANSWERS………….
Compute:
1. 48 x $199 =
$9552
2. 36 x $175 =
$6300
3. 24 x $299.95 =
$7198.80
4. 9360 + 1200 + 125 + 60 = $10,745
27
8-6 HOW DO WE LEASE AN AUTOMOBILE?
1.When you lease an automobile, you make monthly
payments to the leasing company, dealer, or bank
for 2 to 5 years.
2.At the end of the lease, you return it or buy it out
right.
3.Two types of leases: Closed-end lease and Openend lease.
4.After leasing a car, the car has a residual value.
Total Lease Cost= (# of Payments x Amount of Payment) +
Deposit + Title Fee + License Fee
28
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:
Total Lease Cost:
+15.00
$8365.56
29
QUESTIONS???
COMPLETE P.253-254 #1-11 in your textbook.
HW WB P.60
30
PLEASE DO NOW………….
Compute:
1. $79 x 4 =
2. $15 x 8 =
3. $.24 x 500 =
4. $420 divided by 8000 =
31
ANSWERS………….
Compute:
1. $79 x 4 =
$316
2. $15 x 8 =
$120
3. $.24 x 500 =
$120
4. $420 divided by 8000 = $0.0525
32
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
33
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 =
Mileage cost: $0.20 x 468 =
Gasoline cost:
Collision waiver: $10.00 x 3 =
Total cost:
$83.85
$93.60
$21.70
$30.00
$229.15
Find the cost per mile. (Total Cost/# of Miles Driven)
$229.15/468 = $0.49 cost per mile
34
QUESTIONS???
COMPLETE P.255-256 #1-11 in your textbook.
HW WB P.61
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