Ethanol blended with gasoline can be used to power a \"flex-fueled\" car. One bl

Question

Ethanol blended with gasoline can be used to power a "flex-fueled" car. One blend that is gaining popularity is E85, which is 85% ethanol and 15% gasoline. E85 is 80% cleaner burning than gasoline alone, and it reduces our dependency on foreign oil. But a flex-fueled car costs $1,000 more than a conventional gasoline-fueled car. Additionally, E85 fuel gets 10% less miles per gallon than a conventional automobile.
consider a 100% gasoline-fueled car that averages 30 miles per gallon. The E85-fueled car will average about 27 miles per gallon. If either car will be driven 81,000 miles before being traded in, how much will the E85 fuel have to cost (per gallon) to make the flex-fueled car as economically attractive as a conventional gasoline-fueled car? Gasoline costs $2.89 per gallon.
work this problem without considering the time value of money.

Explanation / Answer

Miles rating of gasoline car = 30 miles/gallon Miles rating of E85 car = 27 miles/gallon Fuel needed for 81000 miles for G-car = 81000/30 = 2700 gallons Fuel needed for 81000 miles for E85 car = 81000/27 = 3000 gallons Fuel cost for G-car = 2700*2.89 = 7803 ($) Fuel cost for E85 car = 3000*x ($) (where, $ x is the cost of E85 fuel per gallon) E85 car costs $1000 more than G-car. Hence, Fuel cost of E85 car and taking additional into account , this should match Fuel cost of G-car. => 3000x +1000 = 7803 => x = (7803 - 1000)/3000 = 2.27 ($) (ANSWER)

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