What the minimum acceptable price for special fuel oil

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Question - Waterway Recyclers buys used motor oil for $1.00 per litre from shops that specialize in oil changes and other minor services for cars. The cost of transporting and refining the motor oil is $1.25 per litre. The refined oil becomes commercial-grade motor oil and a thick residual fuel oil. Each litre of used motor oil yields 0.7 L of commercial-grade motor oil and 0.3 L of residual fuel oil. Commercial-grade motor oil is sold for $3.50 per litre, and residual fuel oil is sold for $1.50 per litre.

With additional processing, residual fuel oil can be converted into special fuel oil. The additional processing costs $0.45/L. What would be the minimum acceptable price for the special fuel oil?

Reference no: EM133096854

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