Ethanol blended with gasoline can be used to power a “flex-fueled” car. One particular blend that is gaining in popularity is E85, which is 85% ethanol and 15% gasoline. E85 is 80% cleaner burning than gasoline alone, and it reduces our dependency on foreign oil. But a flex-fueled car costs $1,000 more than a conventional gasoline-fueled car. Additionally, E85 fuel gets 10% less miles per gallon than a conventional automobile. Consider a 100% gasoline-fueled car that averages 30 miles per gallon. The E85-fueled car will average about 27 miles per gallon. If either car will be driven 81,000miles before being traded in, how much will the E85 fuel have to cost (per gallon) to make the flex-fueled car as economically attractive as a conventional gasoline-fueled car? Gasoline costs $3.89 per gallon. Work this problem without considering the time value of money.
Ethanol blended with gasoline can be used to power a “flex-fueled” car. One particular blend that is gaining in popularity is E85, which is 85% ethanol and 15% gasoline. E85 is 80% cleaner burning than gasoline alone, and it reduces our dependency on foreign oil. But a flex-fueled car costs $1,000 more than a conventional gasoline-fueled car. Additionally, E85 fuel gets 10% less miles per gallon than a conventional automobile. Consider a 100% gasoline-fueled car that averages 30 miles per gallon. The E85-fueled car will average about 27 miles per gallon. If either car will be driven 81,000
miles before being traded in, how much will the E85 fuel have to cost (per gallon) to make the flex-fueled car as economically attractive as a conventional gasoline-fueled car? Gasoline costs $3.89 per gallon. Work this problem without considering the time value of money.
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