Finance

Question #32 Your small remodeling business has two work vehicles. One is a small passenger car used for job-site visits and for other general business purposes. The other is a heavy truck used to haul equipment. The car gets 25 miles per gallon (mpg). The truck gets 10 mpg. You want to improve gas mileage to save money, and you have enough money to upgrade one vehicle. The upgrade cost will be the same for both vehicles. An upgraded car will get 40 mpg; an upgraded truck will get 12.5 mpg. The cost of gasoline is $2.65 per gallon. Calculate the annual fuel savings in gallons for the truck and car assuming both vehicles are driven 12,000 miles per year.

Question #33 In the previous problem, suppose you drive the truck x miles per year. How many miles would you have to drive the car before upgrading the car would be a better choice? Hint: Look at the relative gas savings.