Question

A Southern Georgia school district is considering ordering 56 propane-fueled school buses. "They're healthier, they're cleaner burning, and they're much quieter than the diesel option," said a school administrator. Propane-powered buses also reduce greenhouse gasses by 21% compared to gasoline-powered buses and 4% compared to diesel ones. But they come at a premium S96,000 for a propane model, $16,000 more than the diesel equivalent The propane bus operating cost (above and beyond fuel cost) is 21 cents/mile, compared to 30 cents for the diesel. Diesel fuel costs about $4/gallon in Georgia, about $1 more than propane. Bus mileage is 13 mpg for the propane model vs. 11 mpg for diesel. The life of a school bus in the district averages 8 years, and each bus travels an average of 31,000 miles per year because the district is so large and rural. Which bus is the better choice based on a life-cycle analysis? The total cost of using one propane-fueled bus during its life cycle is S(Round your response to the nearest dollar.)

Answer 1

LCC = capital + lifetime operating costs + maintenance cost _ disposal cost - residual value

CAPITAL = 96000
MAINTENANCE COST = 0.21 PER MILE
OPERATING COST = 7153.85 PER YEAR
LIFE = 8
ANNUAL USAGE = 31000

LCC = 96000 + (0.21 * 31000 * 8) + (7153.85 * 8) = 205310.8 OR 205318