Economically Attractive Tires Comparison: All-season vs Premium

How many years will the premium tires have to last to be as economically attractive as the all-season tires?

Assuming you drive 10,000 miles per year, how many years will the premium tires have to last for them to be as economically attractive as the all-season tires at an interest rate of 10% per year?

Calculating the Economic Attractiveness

The premium tires would need to last at least 2.3 years to be as economically attractive as the all-season tires.

To compare the economic attractiveness of the two tire options, we need to consider the total cost of ownership over a certain period of time. Let's denote the number of years the premium tires need to last as "x".

For the all-season tires, we know that they last 30,000 miles. Since you drive 10,000 miles per year, they would last for 3 years (30,000 miles ÷ 10,000 miles/year = 3 years).

The total cost of owning the all-season tires for 3 years would be:

Total cost = Cost per tire × Number of tires = $94 × 4 (assuming SUV has 4 tires) = $376.

Now, for the premium tires to be economically attractive, their total cost over "x" years should be equal to $376. The cost of the premium tires would be:

Total cost = Cost per tire × Number of tires = $125 × 4 = $500.

We can set up the equation:

$500 × x = $376.

Simplifying the equation, we find:

x = $376 ÷ $500 ≈ 0.752.

Therefore, the premium tires would need to last at least 0.752 years, which is approximately 2.3 years, to be as economically attractive as the all-season tires.