Need help to understand how to answer this question. thanks Using the crossover
ID: 390203 • Letter: N
Question
Need help to understand how to answer this question. thanks
Using the crossover mileage between the hybrid vehicle and the alternative vehicle from a competing auto manufacturer below, what is the crossover point in years? Hybrid Vehicle Vehicle Purchase Cost Vehicle Operating Cost per Mile Useful Life of Vehicle Miles per Year Miles per Gallon Average Fuel Price per Gallor Alternative Vehicle Vehicle Purchase Cost Vehicle Operating Cost per Mile Useful Life of Vehicle Miles per Year Miles per Gallon Average Fuel Price per Gallon $19,500 $0.08 14 13,500 35 $3.84 $18,000 $0.14 13,500 $3.84 Given that the crossover mileage is 22,506 miles, the crossover point in years is years (round your response to two decimal places)Explanation / Answer
Operating plus fuel cost of Hybrid vehicle = 0.14+3.84/33 = $ 0.256 per mile
Operating plus fuel cost of Alternative vehicle = 0.08+3.84/35 = $ 0.188 per mile
Crossover mileage = (Purchase cost of Alternative vehicle - Purchase cost of Hybrid vehicle)/(Variable cost of Hybrid vehicle - Variable cost of Alternative vehicle)
= (19500-18000)/(0.256-0.188)
= 22,506 miles
Cross point in years = Crossover mileage / Miles per year
= 22506/13500
= 1.67 years