Question

In: Finance

Your small remodeling business has two work vehicles. One is a small passenger car used for...

Your small remodeling business has two work vehicles. One is a small passenger car used for job-site visits and for other general business purposes. The other is a heavy truck used to haul equipment. The car gets 25 miles per gallon (mpg). The truck gets 10 mpg. You want to improve gas mileage to save money, and you have enough money to upgrade one vehicle. The upgrade cost will be the same for both vehicles. An upgraded car will get 40 mpg; an upgraded truck will get 12.5 mpg. The cost of gasoline is $3.35 per gallon.

Calculate the annual fuel savings, in gallons, for the truck and car assuming both vehicles are driven 8,500 miles per year. (Round your answers to 2 decimal places, e.g., 32.16.)

Assuming an upgrade is a good idea in the first place, which one should you upgrade? Both vehicles are driven 8,500 miles per year. Truck or Car

Solutions

Expert Solution

Calculation of Fuel saved for Upgrade of Car

Before Upgrade

Total miles driven in year = 8,500

Car milage = 25 mpg

Car Gallons per year = Total miles driven in year / Car milage

= 8,500 miles / 25 mpg

= 340 gallon

After Upgrade

Total miles driven in year = 8,500

Car milage = 40 mpg

Car Gallons per year = Total miles driven in year / Car milage

= 8,500 miles / 40 mpg

= 212.5 gallon

Gallons saved for Car due to upgradation = Gallons before upgrade - Gallons before upgrade

= 340 gallons - 212.5 gallons

= 127.5 gallons

Fuel savings in upgrade of car = Gallons saved * cost of gasoline = 127.5 gallons * $3.35 per gallon = $427.125

>>>>

Calculation of Fuel saved for Upgrade of Truck

Before Upgrade

Total miles driven in year = 8,500

Truck milage = 10 mpg

Truck Gallons per year = Total miles driven in year / Truck milage

= 8,500 miles / 10 mpg

= 850 gallon

After Upgrade

Total miles driven in year = 8,500

Truck milage = 12.5 mpg

Truck Gallons per year = Total miles driven in year / Truck milage

= 8,500 miles / 12.5 mpg

= 680 gallons

Gallons saved for truck due to upgradation = Gallons before upgrade - Gallons before upgrade

= 850 gallons - 680 gallons

= 170 gallons

Fuel savings in upgrade of truck = Gallons saved * cost of gasoline = 170 gallons * $3.35 per gallon = $569.5

Therefore,

Fuel savings of Car Upgrade is $427.13

Fuel Savings of Truck upgrade is $569.5

Fuel savings of Truck is more than Car. Hence Truck should be upgraded first.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Your small remodeling business has two work vehicles. One is a small passenger car used for...
Your small remodeling business has two work vehicles. One is a small passenger car used for job-site visits and for other general business purposes. The other is a heavy truck used to haul equipment. The car gets 25 miles per gallon (mpg). The truck gets 10 mpg. You want to improve gas mileage to save money, and you have enough money to upgrade one vehicle. The upgrade cost will be the same for both vehicles. An upgraded car will get...
Your small remodeling business has two work vehicles. One is a small passenger car used for...
Your small remodeling business has two work vehicles. One is a small passenger car used for job site visits and for other general business purposes. The other is a heavy truck used to haul equipment. The car gets 25 miles per gallon (mpg). The truck gets 10 mpg. You want to improve gas mileage to save money, and you have enough money to upgrade one vehicle. The upgrade cost will be the same for both vehicles. An upgraded car will...
Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic...
Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi’s base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) $64,000 Variable costs     Fuel $21,440     Snacks and drinks 720     Landing fees...
Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic...
Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi’s base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) $64,000 Variable costs Fuel $22,720 Snacks and drinks 720 Landing fees...
Give two examples of pressure sensors in the passenger car and discuss how each one works...
Give two examples of pressure sensors in the passenger car and discuss how each one works to serve its purpose
Exercise 6-4 Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in...
Exercise 6-4 Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi’s base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) $48,000 Variable costs     Fuel $17,040     Snacks and drinks 780...
Exercise 6-4 Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in...
Exercise 6-4 Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi’s base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) $48,000 Variable costs     Fuel $14,000     Snacks and drinks 800...
A small car rental company has a fleet of 94 vehicles distributed among its 10 agencies....
A small car rental company has a fleet of 94 vehicles distributed among its 10 agencies. The location of every agency is given by its geographical coordinates X and Y in a grid based on kilometers. We assume that the road distance between agencies is approximately 1.3 times the Euclidean distance (as the crow flies). The following table indicates the coordinates of all agencies, the number of cars required the next morning, and the stock of cars in the evening...
A small car rental company has a fleet of 94 vehicles distributed among its 10 agencies....
A small car rental company has a fleet of 94 vehicles distributed among its 10 agencies. The location of every agency is given by its geographical coordinates X and Y in a grid based on kilometers. We assume that the road distance between agencies is approximately 1.3 times the Euclidean distance (as the crow flies). The following table indicates the coordinates of all agencies, the number of cars required the next morning, and the stock of cars in the evening...
Introduction Rent-a-Car is one of the two car rental agencies serving a small regional airport in...
Introduction Rent-a-Car is one of the two car rental agencies serving a small regional airport in the U.S. Midwest. Forty per cent (40%) of its customers are airline passengers and the remaining sixty per cent (60%) are dwellers of the small nearby college town who use rental cars for business and leisure trips. The airport is within two miles from campus and approximately six miles from the city center. It is easy to reach by car, taxi, or city bus....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT