A suburban taxi company is considering buying taxis with diesel engines instead of gasoline engines. The cars average 50,000 km a year
DIESEL:
Vehicle Cost: 13,000
Useful years in life: 3
Fuel cost per liter: 48 cents
Mileage in km/liter: 35
Annual Repairs: 300
Annual Insurance premium: 500
End of useful life resale value: 2,000
GASOLINE:
Vehicle Cost: 12,000
Useful years in life: 4
Fuel cost per liter: 51 cents
Mileage in km/liter: 28
Annual Repairs: 200
Annual Insurance premium: 500
End of useful life resale value: 3,000
Use an annual cash flow analysis to determine the more economical choice if interest is 6%