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Paul Scott has a 2008 Cadillac that he wants to update with a geo-tracker device so he will have access to road maps and directions. After-market equipment can be fitted for a flat fee of $500, and the service provider requires monthly charges of $20. In his line of work as a traveling salesman, he estimates that this devise can save him time and money - about $35 per month (as the price of gas keeps increasing).

In order to determine the financial feasibility of purchasing the geo-tracker, Paul wants to determine the number of months it will take to break even. He plans to keep the car for another 3 years.

a. Calculate the break even point for the device in months.
b. Based on a, should Paul have the tracker installed in his car?

Solution Preview

a. Calculate the break even point for the device in months.
Monthly savings=P=$35 per ...

Solution Summary

Solution describes the steps to calculate break even point in the given case.

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