An electric automobile can be purchased for $25,000. The automobile is estimated

Question

An electric automobile can be purchased for $25,000. The automobile is estimated to have a life of 12 years with annual mileage of 20,00 miles. Every three years, a new set of batteries will have to be purchased at a cost of $3000. The $3,000 cost of the batteries is a net value with the old batteries traded in for the new ones. Annual maintenance of the vehicle is estimated to cost $700. The cost recharging the batteries is estimated at $0.015 per mile. The salvage value of the batteries and the vehicle at the end of 12 years is estimated at $2,000. Consider the MARR to be 7%. What is the cost par mile to own and operate this vehicle according to these estimates?

Explanation / Answer

Ans) Cost of automobile = $           25,000 Number of years = 12 years Annual Miles = 20000 Miles 3 years = $             3,000 Annual Maintenance = $                700 Salvage value = $             2,000 MARR is = 7% Battery Expense What is the cost per mile to own and operate this vehicle according to these estimates? Ans) Cost of Machine = (25000-2000)/12 Depreciation of Machine 1917 Per year Battery Expense = 3000/3 1000 Per year Annual Maintenance = 700 Per year Recharge of Battery = $             0.015 Per Mile Average Miles per year = 20000*0.015 300 Per year Total Cost Cost of Machine = $             1,917 Battery Expenses = $             1,000 Annual Maintenance = $                700 Rechage of Battery = $                300 Total Cost = $             3,917 MARR is 7% = $           274.19 Total cost of Miles = $        4,191.19 Cost of Per Mile = $               0.21

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