Healthy Chef Creation (HCC) is a local provider of fresh, gourmet, prepared home meal delivery…

Healthy Chef Creation (HCC) is a local provider of fresh,
gourmet,
prepared home meal delivery services in Philadelphia area. HCC is in the
process of
purchasing a minivan for food delivery purposes. The company has found
two
minivans that will meet their needs. A Dodge Grand Caravan for $28,000,
and
Toyota HYB 5 for $34,000. The relevant information about these two vans
are
reported in the following table.
Dodge Grand Caravan Toyota Sienna
Vehicle purchase cost $28,00
0 Vehicle purchase cost $34,000
Vehicle operating cost per
mile $0.28
Vehicle operating cost per
mile $0.32
Useful life of vehicle
(years) 10
Useful life of vehicle
(years) 10
Miles per year 25,000 Miles per year 25,000
Miles per gallon (MPG) 20 Miles per gallon (MPG) 36
Average fuel price per
gallon $2.65
Average fuel price per
gallon $2.65
a. What is the total life cycle cost for each vehicle? Based on life-time cost,
which minivan would you recommend?
b. Starting from part a, what happens to total life cycle cost for each
vehicle if gasoline prices rise from $2.65 to 3.90 per gallon. Which car
will be the more economical now? Show your work.

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