Breakeven Analysis of GAS versus Electric Lease You will conduct a breakeven ana

Question

Breakeven Analysis of GAS versus Electric Lease You will conduct a breakeven analysis on the electric and gasoline options, with the mile per day (mpd) traveled as the base metric to determine at what mpd the two investments are equivalent and based on this value you will determine if you should purchase the Gas or Electric car, bases wholly on the most efficient economic analysis. Assume you are looking at a 5-year window of analysis, after which either car will be sold for the estimated salvage value. MARR = 0.10. Gas Electric Capital Investment (assume full payment at time of purchase Salvage Value Operating Costs $20,000 S30,000 S10,000 $15,000 25 miles per gallon, at24 kwh battery, with 75 miles per 3.00 per gallon charge (max), at S0.20 per kwh

Explanation / Answer

Capital Investment          20,000             30,000 Operating Cost (Mile) =3/25 =24*0.2/75 Operating Cost (Mile)            0.120               0.064 Discount factor for 5 year          3.7908             3.7908 PV of operating Cost            0.455               0.243 Salvage Value          10,000             15,000 Discount Factor 5th Year          0.6209             0.6209 PV of Salvage value          12,418             18,628 Equation for break even miles= 20000-12418+.455x=30000-18628+.243x 7582+.455x=11372+.243x .455x-.243x=3790 x=3790/.212 X=12877 Miles

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