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Making an Informed Decision Using the Quantitative Reasoning Process
Step 1: Understand the Problem
Keep the Old Car or Buy a Used Car
Manny is an online student who currently owns an older car that is fully paid for. He drives, on average, 200 miles per week to commute to work. With gas prices currently at $ 2.64 per gallon, he is considering buying a more fuel-efficient car, and wants to know if it would be a good financial decision.
The old car Manny owns currently gets 15 miles per gallon for average fuel efficiency. It has been a great vehicle, but with its age, it needs repairs and maintenance that average $ 830 per year (as long as nothing serious goes wrong).
The newer, more fuel-efficient car that he is looking at to purchase will cost a total of $ 6,000 over a three-year loan process. This car gets 28 miles per gallon and would only require an average of $ 30 per month for general maintenance. To help make a decision, Manny wants to calculate the total cost for each scenario over three years. He decides to use the quantitative reasoning process to do this.
Step 2: Identify variables and assumptions
Manny has identified some key variables for his situation. Select the two variables that should be removed from his list because they do not apply to the current situation.
Manny’s wages.
The number of miles Manny drives each week.
The loan cost of the used car.
The cost of gas.
The cost of the used car.
Manny’s graduation date from elementary school.
The cost of repairs on the old car.
The year Manny was born.
Manny has also made a list of key assumptions he will be using to make his decision. Check the boxes for the three assumptions from his list that are not useful in this scenario.
Manny assumes he will still like spinach at the end of three years no matter which choice he makes.
Manny assumes he will continue to drive about the same number of miles each week over this three year period.
Manny assumes that nothing will go seriously wrong with either car during this three year period.
Manny assumes he will continue to go running in the mornings every weekday for the next three years.
Manny assumes his lunches will continue to cost about the same for the next three years.
Manny assumes there are 52 weeks in a year.
Manny assumes the loan period will be 3 years.
Manny assumes gas costs will remain about the same over the three years.
Step 3: Apply Quantitative Tools
Use computational and algebraic tools to quantify the total costs (gas, maintenance/repairs, purchase price) for each scenario over the three years.
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