Why diesel units will be kept in service for 4 years

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Reference no: EM13205695

The purchase price for the diesel is $97,995, the engine size is 300 hp, the average speed is 21.4, the fuel consumption is 17 gallons per hour and fuel capacity is 300 gallons. Insurance premiums are $500 more per year for gasoline powered boats. The higher speed of the gasoline powered boats valued at only $50 per day. Annual cost for the units are $9000 for the diesel powered and $6000 for the gasoline powered. Oil changes are $25 for gasoline units and $57 for diesel units. Oil changes occur every 100 hours of engine use. Diesel runs at $2.95 per gallon and gasoline runs at 3.15 per gallon. Nightly refueling stops cost $15, but if refueling is done during the day it cost $55. The units will cover 200 nautical miles in the course of a day. Crews are charged ever six hours. Delivery services operate 18 hours per day 7 days a week. Diesel units will be kept in service for 4 years before being sold for $48000 each. Gasoline units will be sold for $38000 and the MARR is 18%.

Reference no: EM13205695

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