Question

A consumer is considering two different purchasing options for the car of their choice. The first option, which is leasing, is described by the equation 250x - y + 4000 = 0 where x represents the number of months of ownership and y represents the total paid for the car after ‘x' months. The second option, which is the financing option, will cost $400 for 0 months of ownership, (0,400), and $4400 for 10 months of ownership, (10, 4400). Part A: Find the equations, in slope/y-intercept form, for each of the purchasing options. Explain the significance of the slope and y-intercept for each purchasing option. Part B: Graph each equation on the same set of axes and compare. Under what conditions is each purchasing option the best choice? Be sure to provide a thorough answer. Use detailed information from your graph to back up your choices.

Answer 1

Answer:

• y=250x+4000
• y=400x+400

Step-by-step explanation:

Given that:

• x represents the number of months of ownership; and
• y represents the total paid for the car after ‘x' months.

First Option (Leasing)

250x - y + 4000 = 0

Expressing the equation in the Slope-Intercept Form y=mx+b, we have:

y=250x+4000

Second Option (Financing)

$400 for 0 months of ownership, (0,400), and $4400 for 10 months of ownership, (10, 4400).

First, we determine the slope of the line joining (0,400) and (10,4400)

$Slope, m= \dfrac{4400-400}{10-0}= \dfrac{4000}{10}=400$

We have:

y=400x+b

When y=400, x=0

400=400(0)+b

b=400

Therefore, the Slope-Intercept Form of the second option is:

y=400x+400

Significance

• In the first option, there is a down payment of $4000 and a monthly payment of $250.
• In the second option, there is a down payment of $400 and a monthly payment of $400.

Part B

We notice from the graph that after 24 months, the cost for leasing and financing becomes the same ($10,000). Therefore, a consumer will be better off financing since the downpayment for leasing is higher.

i.e

• When x=0, y=$4000 for leasing
• When x=0, y=$400 for financing