Answer Happy

2. The Universal Postal Service is considering the possibility of putting wind deflectors on the tops of 500 of their long-haul tractors. Three types of deflectors, with the following characteristics, are being considered (MARR = 10% per year): Capital Investment Drag Reduction Maintenance/year Useful Life Type A $1,000 20% $10 10 years Type B $400 10% $5 10 years Type C $1,200 25% $5 5 years If 5% in drag reduction means 2% in fuel savings per mile, how many miles do the tractors have to be driven per year before Type A deflector is favored over the other deflectors? Over what range of miles driven per year is Type C deflector the best choice? (Note: Fuel cost is expected to be $1.00 per gallon and average fuel consumption is five miles per gallon without the deflectors.) Ans. X≤12,831, select Type B; 12,831<X≤37,203, select Type A; X>37,203, select Type C where X = number of miles driven per year