Your small remodeling business has two work vehicles. One is a small passenger c
ID: 2708543 • 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 $3.70 per gallon.
Suppose you drive the truck 12,000 miles per year. How many miles would you have to drive the car before upgrading the car would be the better choice?
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 $3.70 per gallon.
Explanation / Answer
CAR
(before upgrade) :
12,000 miles / 25 mpg = 480 gallons
480 gallons / $3.70 per gallon = $129.73
(after upgrade) :
12,000 miles / 40 mpg = 300 gallons
300 gallons / $3.70 per gallon = $81.08
$129.73 - $81.08 = $48.65 savings with upgrade
TRUCK
(before upgrade) :
12,000 miles / 10 mpg = 1,200 gallons
1,200 gallons / $3.70 per gallon = $324.32
(after upgrade) :
12,000 miles / 12.5 mpg = 960 gallons
960 gallons / $3.70 per gallon = $259.46
$324.32 - $259.46 = $64.86 savings with upgrade
Upgrade the truck because the company saves more money
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