Carson City is buying new buses, and has to select from two models. Model A (diesel bus) costs $80,000 to buy, with a fuel efficiency of 12 miles/gallon. Its operating cost is $0.28/mile. Model B (a hybrid bus) costs $105,000 to purchase, but gets an average of 35 miles/gal. Its operating cost is $0.32/mile. The annual distance traveled is 25,000 miles, and the expected service life of either bus is 10 years. The average diesel price is $4.50/gallon. 1. The total life cycle cost for Bus A (in $) is:
A) 237,500
B) 243,750
C) 231,250
D) 238,750
E) 212,500
2. The total life cycle cost for Bus B (in $) is:
A) 202,857
B) 224,773
C) 219,091
D) 229,432
E) 217,143
3. How many miles does each bus have to travel for the life cycle costs to be equal:
A) 233,051
B) 180,412
C) 165,563
D) 121,107
E) 139,949
4. What is the crossover point in years:
A) 4.84
B) 9.32
C) 6.62
D) 7.21
E) 5.60