A suburban taxi company is considering buying taxis with diesel engines instead of gasoline engines. The cars average 80,000 km a year. Use an annual cash flow analysis to determine the more economical choice if interest is 6%.

Re-do this problem to calculate the EUAW of the alternative as a function of miles driven per year to see if there is a crossover point in the decision process. Graph your results.

Diesel $24,000 Gasoline $19,000 $0.92 Vehicle Cost Useful life, in years Fuel Cost per liter Mileage, in km/liter Annual repairs Annual insurance premium End-of-useful-life resale value $0.88 16 $900 11 $700 $1,000 $6,000 $4,000