Car rental services normally offer two rates.
- Standard daily rate plus cents per mile
- Unlimited mileage per day
rental plan you should choose depends on how far you will go
during the trip. The
math concept that will help you make the choice is called the
breakeven analysis. Below is a table for the rental cost.
||Standard Daily Rate
||Plus Cents Per
For standard daily rate plus cents per mile rental plan:
TC = FC + VC
TC = Total Cost (Total rental cost per day)
FC = Fixed Cost (Standard daily rate)
VC = Variable Cost (cents per mile ´ number of miles driven)
For unlimited mileage plan:
TC = UMD
UMD = Unlimited Mileage Daily
Rose and her family are going to Sacramento for a one day trip.
They plan to rent a station wagon. What is the breakeven point of
the rental costs? (The total number of miles that they drive makes
the cost the same for limited and unlimited mileage)
m = total number of miles driven
Total Cost (Limited) = Total Cost (Unlimited )
55 + (0.25 ´ m) = 89
0.25 ´ m = 34
m = 136
At 136 miles, the cost for the unlimited mileage and the limited
mileage is equal. If you travel more than 136 miles, take the
unlimited, but if you travel less than that, take the limited.
Michelle and her family are going on a vacation trip to Salt Lake
City, Utah, from their home town, Rancho Palos Verdes. The total
driving distance is 1,700 miles and the trip will last one week (7
days). If they are renting a midsize car which rental option should