Your small remodeling business has two work vehicles. One is a small passenger c
ID: 2696161 • Letter: Y
Question
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 (Do not round calculations or final answer).
Car:
Truck:
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.
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.
Explanation / Answer
Truck: Annual Running = 8500 miles per annum
Old Mileage = 25 mpg and New Mileage = 40 mpg
Fuel Required by Old Truck = 8500 / 25 = 340 gallons and Fuel Required by New Truck = 8500 / 40 = 212.5 gallons
Fuel Savings per annum = (340 - 212.5) = 127.5 gallons
Fuel Cost per Unit = $ 3.35 per gallon
Annual Fuel Cost Savings = 3.35 x 127.5 = $ 427.125
Car: Annual Running = 8500 miles per annum
Old Mileage = 12.5 mpg and New Mileage = 10 mpg
Fuel Required by Old Car = 8500 / 10 = 850 gallons and Fuel Required by New Truck = 8500 / 12.5 = 680 gallons
Fuel Savings per annum = (850 - 680) = 170 gallons
Fuel Cost per Unit = $ 3.35 per gallon
Annual Fuel Cost Savings = 3.35 x 170 = $ 569.5
As upgrading the car entails more fuel cost savings as compared to the truck, the former should be upgraded.
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