Breakeven Analysis An aerodynamic three-wheeled automobile (the Dart) runs on compressed naturalgas stored in two cylinders in the rear of the vehicle. The $13,000 Dart can cruise at speeds up to 80 miles per hour, and it can travel 100 miles per gallon of fuel. Another two-seater automobile costs $10,000 and averages 50 miles per gallon of compressed natural gas. If fuel costs $8.00 per gallon and MARR is 10% and 15%per year, over what range of annual miles driven is the Dart more economical? Assume a useful life of five years for both cars.
1. Breakeven Analysis
An aerodynamic three-wheeled automobile (the Dart) runs on compressed naturalgas stored in two cylinders in the rear of the vehicle. The $13,000 Dart can cruise at speeds up to 80 miles per hour, and it can travel 100 miles per gallon of fuel. Another two-seater automobile costs $10,000 and averages 50 miles per gallon of compressed natural gas. If fuel costs $8.00 per gallon and MARR is 10% and 15%per year, over what range of annual miles driven is the Dart more economical? Assume a useful life of five years for both cars.
2. Sensitivity Analysis
We know the standard means of cutting the high cost of driving our automobiles—slow down your speed, no jack rabbit starts, inflate tires properly, clean air filters regularly, and so on. Another way to reduce the cost of driving is to join every bigrigger in the United States and half of Europe-go diesel. Diesels are inherently more efficient than gasoline engines because they deliver a third better fuel mileage. They also offer a reliable high-torque engine! The initial extra sticker price of a dieselfueled car is about $1,200. A gallon of diesel fuel costs about the same as a gallon of gasoline. Assume your gasoline-fueled car averages 24–27 miles per gallon. You drive an average of 20,000 miles per year, and your personal MARR is in the 12–15% per year ballpark. Develop a spreadsheet to compare the economics of driving 100,000 miles in your car fueled by gasoline versus diesel. Explore various what if questions that you have regarding this comparison.
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