Question

5. Hartley Auto Supply delivers parts to area auto services centers and is replacing its fleet of delivery vehicles. It considers the gasoline engine truck and an alternative hybrid vehicle with the specifications provided below. a. Using the data provided, if gas prices rose to $2.50 per gallon, what would be the new crossover point in miles? The new crossover point would be miles Gasoline engine truck $25,000 $0.13 10 years Vehicle purchase cost Vehicle operating cost per mile Useful life of vehicle Miles per year Miles per gallon Average fuel price per gallon 18,000 25 $1.85 Hybrid vehicle $29,000 $0.08 10 years 18,000 Vehicle purchase cost Vehicle operating cost per mile Useful life of vehicle Miles per year Miles per gallon Average fuel price per gallon 35 $1.85

Answer 1

The concept of cross over point depend of life cycle cost , at the cross over point the life cycle cost of both vehicle should be equal to each other.

Let M is break even point in miles

Life cycle cost of gasoline engine truck = Life cycle cost of hybrid engine truck

gallon 25000 + + 0.13 *M = 29000 + gallon Miles Miles + 0.08 gallon 35 gallon

M= 50909.09 miles