Score: 0 of 2 pts 9 of 16 (10 complete) Problem S5.5 What is the crossover point

Question

Score: 0 of 2 pts 9 of 16 (10 complete) Problem S5.5 What is the crossover point in miles between the hybrid vehicle and the alternative vehicle from a competing auto manufacturer? Hybrid Vehicle Vehicle Purchase Cost Vehicle Operating Cost per Mile Useful Life of Vehicle Miles per Year Miles per Gallon Average Fuel Price per Gallorn $18,000 0.14 15 years 15,000 Alternative Vehicle Vehicle Purchase Cost Vehicle Operating Cost per Mile Useful Life of Vehicle Miles per Year Miles per Gallon Average Fuel Price per Gallor $20,000 $0.08 15 years 15,000 35 $3.68 $3.68 The crossover point, M, is miles (round your response to the nearest whole number)

Explanation / Answer

The crossover point is the break-even point of the two vehicles where we are indifferent between two vehicles. It can be calculated from following equation, where the break-even point is M.

Total Cost of Hybrid vehicle = Total Cost of Alternative vehicle

Vehicle Purchase Cost + [(Average Fuel Price per Gallon/ Miles per Gallon) + Vehicle Operating Cost per Mile] * (M Miles) = Vehicle Purchase Cost + [(Average Fuel Price per Gallon/ Miles per Gallon) + Vehicle Operating Cost per Mile) * (M Miles)

Now putting the values in the above equation

$18,000 + [($3.68/33 Miles) + $0.14] * M = $20,000 + [($3.68/35 Miles) + $0.08] * M

$18,000 + [$0.2515] * M = $20,000 + [$0.1851] * M

Or $0.2515 * M - $0.1851 * M = $20,000 -$18,000

Or ($0.2515 - $0.1851) * M = $2,000

Or M = $2,000 / $ 0.06637 = 30,133 miles

Therefore the crossover point M is 30,133 miles

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.