Expected to drive before both options break even – Operation Management
The regular car can drive an average of 27 miles per gallon while the electrical car can drive 100 miles per charge. Assuming that gasoline prices remain on average at $3/gallon, while charging the electrical car costs on average $5/charge. Either car you end up purchasing will be used for work only and a round trip is 25 miles per day (you can assume that a week is 5 work days and a year is 50 work weeks). Ignoring the time value of money, maintenance cost, and resale value, answer the following:
a) How much is the total cost for each option in the first year given the amount of driving you are expected to make
b) Assuming all of the given numbers remain the same over the years, how many years are you expected to drive before both options break even.
