What is the breakeven annual mileage for extra investment

Reference no: EM13204260

A company is considering purchasing a fleet of delivery vans which are available with either a diesel or gasoline fueled motor. The gasoline powered van has an initial price of $29,750, the diesel powered one costs $32,250. Both vehicles have a salvage value of $5,000 after 5 years.

The fuel economy of the diesel van is 17MPG, the gasoline powered van achieves 12.5MPG. Both vehicles have a salvage value of $5,000 after 5 years. Both gasoline and diesel are available at $3.59 per gallon. The company uses 20% for MARR (Minimal Accepted Rate of Return). What is the breakeven annual mileage for the extra investment in the diesel powered can if the company plans to keep the vans for 5 years? Show the comparison of the costs of the two alternatives on a graph using miles per year as the X-axis.

Reference no: EM13204260

Questions Cloud

List the determinant that led you to that conclusion : For each event given below, respond to the following points using the determinants of demand and supply A. Determine whether demand or supply changes or if the event instead causes a change in quantity demanded or quantity supplied.

State the capital is depreciated at a rate : What effect would a $10 million capital expense have on this year's earnings if the capital is depreciated at a rate of $2 million per year for five years? What effect would it have on next

What is the irr on the incremental investment : A company is considering purchasing a fleet of delivery vans which are available with either a diesel or gasoline fueled motor. The gasoline powered van has an initial price of $29,750, the diesel powered one costs $32,250. Both vehicles have a sa..

State the probability that the caferteria serves peas : If the school cafeteria serves meat loaf, there is a 70% chance that they will serve peas. If they do not serve meat loaf, there is a 30% chance that they will serve peas anyway. The students know that meat loaf will be served exactly once durin..

What is the breakeven annual mileage for extra investment : A company is considering purchasing a fleet of delivery vans which are available with either a diesel or gasoline fueled motor. The gasoline powered van has an initial price of $29,750, the diesel powered one costs $32,250. Both vehicles have a sa..

Compute margins at the bottom and sides : margins at the bottom and sides and a 3 inch margin at the top. What dimensions will give the largest printed area?

How much interest will be paid over the eight-year period : how much interest is payable each year on a loan of $2000 if the interest rate is 10% per year when half of the loan principal will be repaid as a lump sum at the ed of four years and the other half will be repaid in one lump-sum amount at the end..

How might the market power of quad plex cinema be measured : Perfect Competition If all the assumptions of perfect competition hold, why would firms in such an industry have little incentive to carry out technological change or much research and development What condition would encourage research and develo..

Find the probability that the x-coordinate of the selected : What is the probability that the x-coordinate of the selected point is less than the y-coordinate?

User Account

All Pages