Business, 12.04.2021 22:30 fdryktysysmzet3640

Blue Star is starting a new distribution service that delivers auto parts to the service departments of auto dealerships in the local area. Blue Star has found two light-duty trucks that would do the job well, so now it needs to pick one to perform this new service. The Ford TriVan costs $28,000 to buy and uses regular unleaded gasoline, with an average fuel efficiency of 24 miles per gallon. The TriVan has an operating cost of $.20 per mile. The Honda CityVan, a hybrid truck, costs $32,000 to buy and uses regular unleaded gasoline and battery power; it gets an average of 37 miles per gallon. The CityVan has an operating cost of $.22 per mile. The distance traveled annually is estimated to be 22,000 miles, with the life of either truck expected to be 8 years. The average gas price is $4.25 per gallon. Required:
a. Based on Life Cycle Cost, which model of truck is best choice?
b. How many miles does Blue Star need to put on a truck to break even (the cost to be equal)?
c. What is the payback period?

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Blue Star is starting a new distribution service that delivers auto parts to the service departments...

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