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globaldesi
Joined: 28 Jul 2016
Last visit: 23 Feb 2026
Posts: 1,140
Given Kudos: 67
Location: India
Concentration: Finance, Human Resources
Schools: ISB '18 (D)
GPA: 3.97
WE:Project Management (Finance: Investment Banking)
Products:
07 Oct 2020, 22:01
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C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
58% (01:30) correct
42%
(01:39)
wrong
based on 587
sessions
History
Date
Time
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Not Attempted Yet
The Alpha Motor Company is set to release a new model at a slightly higher price than last year's. The company claims that this year's model will cost less in the long run due to its higher safety rating and improved mileage.
Which of the following assumptions has no bearing on the claim that the new model will cost less in the long run than its predecessor?
A. Gas prices will rise through the life of the car.
B. The new model will generally be as reliable as last year's model.
C. Buyers can afford the new price
D. The new car will have lower tire replacement costs.
E. A higher safety rating will lead to a lower price for insurance.
Which of the following assumptions has no bearing on the claim that the new model will cost less in the long run than its predecessor?
A. Gas prices will rise through the life of the car.
B. The new model will generally be as reliable as last year's model.
C. Buyers can afford the new price
D. The new car will have lower tire replacement costs.
E. A higher safety rating will lead to a lower price for insurance.
08 Oct 2020, 05:08
Kudos
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The Alpha Motor Company is set to release a new model at a slightly higher price than last year's. The company claims that this year's model will cost less in the long run due to its higher safety rating and improved mileage.
Which of the following assumptions has no bearing on the claim that the new model will cost less in the long run than its predecessor?
It should be C as other factors have at least some impact on the cost of the new model in the long run
A. Gas prices will rise through the life of the car.
B. The new model will generally be as reliable as last year's model.
C. Buyers can afford the new price
D. The new car will have lower tire replacement costs.
E. A higher safety rating will lead to a lower price for insurance.
Which of the following assumptions has no bearing on the claim that the new model will cost less in the long run than its predecessor?
It should be C as other factors have at least some impact on the cost of the new model in the long run
A. Gas prices will rise through the life of the car.
B. The new model will generally be as reliable as last year's model.
C. Buyers can afford the new price
D. The new car will have lower tire replacement costs.
E. A higher safety rating will lead to a lower price for insurance.
globaldesi
Joined: 28 Jul 2016
Last visit: 23 Feb 2026
Posts: 1,140
Given Kudos: 67
Location: India
Concentration: Finance, Human Resources
Schools: ISB '18 (D)
GPA: 3.97
WE:Project Management (Finance: Investment Banking)
Products:
10 Oct 2020, 06:46
Kudos
Bookmarks
Official Explanation
(C) The passage implies that Alpha believes the reduction in running costs of the new model will, over the life of the car, more than offset the higher purchase price of the car. The savings Alpha foresees are related to gas mileage and the new model's improved safety features.
If gas prices increase, given in choice (A), the offset will occur more quickly. True, Alpha will have had to assume as part of its calculations that buyers of the new model will drive a reasonable number of miles. If they never take the car out of the garage, improved gas mileage will have no financial effect whatever. Driving a reasonable number of miles is an appropriate assumption.
Choice (B) underpins Alpha's claim: reliability could decrease and cost more in the long run or otherwise affect costs. Although it does not mean that the new model will cost less, it is still relevant for calculating costs.
Choices (D) and (E) will clearly help save running costs to compensate for the increase in purchase price.
Choice (C) is the only one that has no bearing on Alpha's claim and is, therefore, the correct answer.
(C) The passage implies that Alpha believes the reduction in running costs of the new model will, over the life of the car, more than offset the higher purchase price of the car. The savings Alpha foresees are related to gas mileage and the new model's improved safety features.
If gas prices increase, given in choice (A), the offset will occur more quickly. True, Alpha will have had to assume as part of its calculations that buyers of the new model will drive a reasonable number of miles. If they never take the car out of the garage, improved gas mileage will have no financial effect whatever. Driving a reasonable number of miles is an appropriate assumption.
Choice (B) underpins Alpha's claim: reliability could decrease and cost more in the long run or otherwise affect costs. Although it does not mean that the new model will cost less, it is still relevant for calculating costs.
Choices (D) and (E) will clearly help save running costs to compensate for the increase in purchase price.
Choice (C) is the only one that has no bearing on Alpha's claim and is, therefore, the correct answer.
