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Lesson 3 P5 Vehicle Maintenance and Insurance Costs 2014.notebook

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February 10, 2014

OPERATING COSTS FOR A VEHICLE

Targeted Learning OutcomeIt is expected that you will be able to:Develop an understanding of the costs associated with owning and operating a vehicle.

By the end of this learning experience, you can demonstrate that you have met this outcome by being able to:

• Determine costs associated with operating a vehicle including regular maintenance, repairs, fuel consumption, or depreciation.

• Determine the costs of insuring a vehicle for various uses.


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Vehicle Maintenance and Insurance CostsList some costs for owning a vehicle (other than the loan itself):


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Vehicle Fuel EconomyThe number of litres of gasoline required to travel 100 kilometres is known as the vehicle's fuel economy or consumption.

The fuel economy of your vehicle will vary, depending on when and how you drive. The types of optional equipment that you have installed and the size and condition of the vehicle will also affect the fuel economy. Manufacturers are required to place a fuel economy label on new vehicles. Generally, they will indicate the city and highway fuel economy for that particular model.

You may hear "miles per gallon" as a reference to fuel ecomony but for this course we will be expressing fuel economy in L/100 km.

Different vehicles require different amounts of gasoline to drive the same distance.


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Example 1:At 60 km per hour, a sedan uses 18.4L of gasoline to drive 225 km. At 100 km per hour, the same sedan uses 22.1L of gasoline to drive the same distance.

a. Find the fuel economy of the sedan at 60 km per hour.

b. Find the fuel economy of the sedan at 100 km per hour.

c. What does this example suggest about the relationship between the fuel economy of a vehicle and the speed?


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February 10, 2014

Example 2:The Smith family is planning a driving vacation of a distance of 5000 km. The family has two vehicles, a sedan and an SUV. The fuel consumption for the sedan is 8.8L/100km and for the SUV is 12.7L/100km. The family estimates that the cost of gasoline during their vacation will be $1.11 per litre.a. Calculate the cost of gasoline required by the sedan.

b. Calculate the cost of gasoline required by the SUV.

c. Which vehicle is less expensive to drive on the vacation and by how much?

d. What other factors might the family consider when deciding which vehicle to take on their vacation?


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February 10, 2014

http://www.mpi.mb.ca/english/english.html

Example:Use the MPI "Insurance Rate Calculator" to obtain an estimate for the following vehicle.

• 2009, Chevrolet Cobalt LS, 2door• Manitoba resident with postal code R4H 1H7, insuring in the Municipality of Winnipeg.

• Allpurpose insurance with a 10% discount, 500 deductible, $1,000,000 third party liability.

The car will not be insured for Auto Loss of Use or New car protection and the vehicle is not valued at over $50 000 so no selection is required for these.

The payment type chosen is full payment.

Internet Activity: Calculating Vehicle Insurance Rates

http://www.mpi.mb.ca/english/english.html


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February 10, 2014

Vehicle Maintenance and Repairs

Here are vehicle maintenance tips that may help:

Monthly checks for tire inflation and condition, operation of lights, and fluid levels.

Check the transmission fluid, battery and cables, belts, engine air filter, oil and filter, exhaust, fuel filter, power steering fluid and hoses every 36 months.

Ensure that you follow the suggested kilometre schedule for oil changes.

Do 6 month checks on chassis lubrication, polish and wiper blades.

Do 12 month checks on brakes, cabin air filter, coolant, spark plugs and steering and suspension.

Check out the owner's handbook that came with your vehicle.

It includes a detailed recommended maintenance schedule for your vehicle.


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Vehicle Maintenance and RepairsExample:Jordan takes his car in for regular service and the technician discovers the radiator hose needs to be replaced. The servicing of the vehicle requires three litres of oil at $5.66 per litre, an oil filter for $11.99, and half litre of washer fluid worth $2.25 a litre. The radiator hoses costs $12.95 and the antifreeze then needs to be topped up at a cost of $1.99 per litre. The vehicle will require 4 litres of antifreeze. the total time required to service vehicle is 1 hour 15 minutes. The rate the service station charges for labour is $80 per hour. Find the total cost of servicing and repairing the vehicle.


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February 10, 2014

Trixie drives her minivan to work 5 days per week. She lives 47 km from work. She estimates that she drives an additional 245 km each week. Using the chart below, estimate Trixie's yearly operating costs.

1. Calculate how far she drives in one week.

2. Calculate how far she drives in one year.

3. Use chart value to determine annual costs.


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Average Ownership Cost

What is Trixie's total cost for one year using her minivan?

What is her daily cost?

What is her monthly cost?


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Questions 1 5

Practice Questions

Pages 14 & 15


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Vehicle DepreciationExample:The sale price of a vehicle is $38,500. The rate of depreciation is 20% each year. The term of the lease is 36 months; the residual value of the vehicle will be 55% of the sale price.

1. Calculate the value of the vehicle and the amount of depreciation at the end of the first year.

2. Calculate the value of the vehicle and the amount of depreciation at the end of the second year.

3. Calculate the value of the vehicle and the amount of depreciation at the end of the third year.

4. Calculate the residual value of the vehicle at the end of the lease.

5. How does the value of the depreciated vehicle compare to the residual value stated in the lease, after three years?

Extra... Extra... Extra!

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