Daniel Is Trying to Decide Whether to Buy a Car

question 47

Multiple Choice

Daniel is trying to decide whether to buy a car or a truck. The truck he is considering will cost him a month in loan payments, and it gets 15 miles per gallon in gas mileage. The car will cost a month in loan payments, but it gets miles per gallon in gas mileage. Daniel estimates that he will pay per gallon for gas. This means that the monthly cost to drive the truck x miles will be The total monthly cost to drive the car x miles will be The following figure shows the graph of each equation. At how many miles do the car and the truck cost the same to operate?

---

Definitions:

TIPS Bond

Treasury Inflation-Protected Securities, a type of U.S. treasury bond that is indexed to inflation to protect investors from the negative effects of rising prices.

Nominal Rate of Return

The yield from an investment prior to considering inflation adjustments.

Treasury Bond

A long-term, fixed-interest government security with a maturity of more than ten years, considered a safe investment.

Bid

The price a buyer is willing to pay for a security or asset.