Copyright 2025 Pearson Education, Inc.

Copyright © 2025 Pearson Education, Inc.Solutions to Chapter 11 Problems

11-1 The annual capital recovery cost is $20 million (A/P, 5%, 40) = $20 million(0.0583) = $1,166,000.Operating and maintenance expenses add $3,000,000 in obtaining the total annual cost of $4,166,000.The breakeven annual ridership is $4,166,000 per year / $3 per customer = 1,388,667 customers per year.This equates to 1,388,667 customers per year / 365 days per year = 3,805 customers per day (on average). 1 / 4

Copyright © 2025 Pearson Education, Inc.11-2 The unknown is now the mileage driven each year (instead of fuel cost).

EUACH = $30,000(A/P, 3%, 5) + ($4.00/gal)(X mi/yr)/(30 mpg)

EUACG = $28,000(A/P, 3%, 5) + ($4.00/gal)(X mi/yr)/(25 mpg)

Setting EUAC H = EUACG, we find the breakeven mileage to be X = 16,380 miles per year.

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Copyright © 2025 Pearson Education, Inc.11-3 The annual operating expenses of long-haul tractors equipped with the various deflectors are calculated

as a function of mileage dirven per year, X:

Windshear: [(X mi/yr)(0.92)(0.2 gal/mi)($3.00/gal)] = $0.736X / yr

Blowby: [(X mi/yr)(0.96)(0.2 gal/mi)($3.00/gal)] = $0.768X / yr

Air-vantage: [(X mi/yr)(0.90)(0.2 gal/mi)($3.00/gal)] = $0.720X / yr

EUAC can now be written in terms of X.

EUACW = $1,000(A/P, 10%, 10) + $10 + $0.736X = $172.70 + $0.736X

EUACB = $400(A/P, 10%, 10) + $5 + $0.768X = $70.08 + $0.768X

EUACA = $1,200(A/P, 10%, 5) + $5 + $0.720X = $321.56 + $0.720X

The breakeven values can be computed between each pair of deflectors by equating their EUAC equations and solving for X.

Windshear and Blowby: X = 3,207 miles per year

Blowby and Air-vantage: X = 5,239 miles per year

Air-vantage and Windshear: X = 9,304 miles per year

The range over which each deflector is preferred is:

X ≤ 3,207 Select Blowby 3,207 ≤ X ≤ 9,304 Select Windshear 9,304 ≤ X Select Air-vantage

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Copyright © 2025 Pearson Education, Inc.

11-4 (a) Assuming repeatability, we can find the breakeven mileage as follows:

-$27,000 (A/P, 5%, 4) + $9,000 (A/F, 5%, 4) - $0.42X

= -$21,000 (A/P, 5%, 3) + $6,000 (A/F, 5%, 3) - $0.36X

X = 4,697 miles per year (b) EUAC Gasoline = $11,826

EUAC Diesel = $11,208

Recommend the diesel truck

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