An automobile that runs on electricity can be purchased for $30,000. The automobile is estimated to have a life of 12 years with annual travel of 20,000 kilometers. Every three years, a new set of batteries will have to be purchased at a cost of $3000. Annual maintenance of the vehicle is estimated to cost $700. The cost of recharging the batteries is estimated at $0.015 per Kilometer. The salvage value of the batteries and the vehicle at the end of 12 years is estimated to be $2000. Suppose the MARR is 7%. What is the cost per Kilometer to own and operate this vehicle, based on the preceding estimates? The $3000 cost of the batteries is a net value, with the old batteries traded in for the new ones.

An automobile that runs on electricity can be purchased for $30,000. The automobile is estimated to have a life of 12 years with annual travel of 20,000 kilometers. Every three years, a new set of batteries will have to be purchased at a cost of $3000. Annual maintenance of the vehicle is estimated to cost $700. The cost of recharging the batteries is estimated at $0.015 per Kilometer. The salvage value of the batteries and the vehicle at the end of 12 years is estimated to be $2000. Suppose the MARR is 7%. What is the cost per Kilometer to own and operate this vehicle, based on the preceding estimates? The $3000 cost of the batteries is a net value, with the old batteries traded in for the new ones.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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