What is the breakeven annual mileage for extra investment

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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

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