A project will require 100,000 gal of diesel fuel over a period of 3 years. The estimate has been prepared using a fuel price of $2.90 per gal. Per- form a sensitivity analysis of the effect of rising fuel prices. Some have predicted that the price of diesel could rise to $3.30 per gal in two years.

 What fuel cost will you use in the estimate? If the estimated consumption is 50,000 gal in the first year, 35,000 gal in the second year, and 15,000 gal in the third year, how would that affect your estimated cost?

 

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$2.90 per gal. $/gal 2.90 $290,000 2.95 $295,000 3.00 $300,000 3.05 $305,000 3.10 $310,000 3.15 $315,000 $320,000 3.20 3.25 $325,000 3.30 $330,000 3.35 $335,000 100,000 gal 1 2 3 50,000 35,000 15,000 $145,000 $101,500 $43,500 $147,500 $103,250 $44,250 $150,000 $105,000 $45,000 $152,500 $106,750 $45,750 $155,000 $108,500 $46,500 $157,500 $110,250 $47,250 $160,000 $112,000 $48,000 $162,500 $113,750 $48,750 $165,000 $115,500 $49,500 $309,750 $167,500 $117,250 $50,250 310,000 $2.90 per gal. $/gal 2.90 $290,000 2.95 $295,000 3.00 $300,000 3.05 $305,000 3.10 $310,000 3.15 $315,000 $320,000 3.20 3.25 $325,000 3.30 $330,000 3.35 $335,000 100,000 gal 1 2 3 50,000 35,000 15,000 $145,000 $101,500 $43,500 $147,500 $103,250 $44,250 $150,000 $105,000 $45,000 $152,500 $106,750 $45,750 $155,000 $108,500 $46,500 $157,500 $110,250 $47,250 $160,000 $112,000 $48,000 $162,500 $113,750 $48,750 $165,000 $115,500 $49,500 $309,750 $167,500 $117,250 $50,250 310,000

Answer rating: 100% (QA)

To perform a sensitivity analysis of the effect of rising fuel prices we need to consider the differ... View the full answer