Buying taxis with diesel engines instead of gasoline engines

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Reference no: EM13875237

A suburban taxi company is considering buying taxis with diesel engines instead of gasoline engines. The cars average 50,000 km a year

DIESEL:

Vehicle Cost: 13,000

Useful years in life: 3

Fuel cost per liter: 48 cents

Mileage in km/liter: 35

Annual Repairs: 300

Annual Insurance premium: 500

End of useful life resale value: 2,000

GASOLINE:

Vehicle Cost: 12,000

Useful years in life: 4

Fuel cost per liter: 51 cents

Mileage in km/liter: 28

Annual Repairs: 200

Annual Insurance premium: 500

End of useful life resale value: 3,000

Use an annual cash flow analysis to determine the more economical choice if interest is 6%

Reference no: EM13875237

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