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Seattle is thinking about a new terminal facility to process biofuel. The costs are provided below. Biofuel processing costs $0.35 per gallon BUT the biofuel
Seattle is thinking about a new terminal facility to process biofuel. The costs are provided below. Biofuel processing costs $0.35 per gallon BUT the biofuel can be sold for $0.95 per gallon. The life of the building and equipment is 20 years. The life of the trucks is 10 years. A MARR of 12% is desired. (a) Breakeven: How many gallons of oil must be sold to breakeven annually? (b) Sensitivity: If annual costs (maintenance and labor) AND processing fees (originally $0.35) increase by 10%, what must the new price (up from $0.95) be if the number of | gallons sold does not change? Initial costs: Buildings Trucks Maintenance Labor 1$1,500,000 $150,000 $145,000 $500,000 Annual costs
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