Team 1: Truck PurchaseGas vs. Diesel

David Beach – Fuel Research

Chris Kaya – Estimated Maintenance Research

Toan Le – Vehicle Licensing Fee Research

Thomas Majich – Economic research & cost analysis

Reuben Quist – Annual Insurance Cost Research

Ford F-350 Reg. Cab 4x2 8’

Gas Engine 6.8L V10 EFI

Diesel Engine 6.0L Power

Stroke Turbo Diesel V8

vs.

Units of Comparison

Gas Mileage & differences in fuel cost

Insurance Cost per year Salvage Value (in 5 years) Annual Estimated Maintenance Annual Vehicle Licensing Fee

Assumptions

1. Rate of Inflation = 3.27% per year

10 year Treasury = 4.22%

6 month Treasury = 0.95%

2. Annual Miles Driven = 35,000 mi.

15,000 Highway

20,000 Street

Methodology

Gather relevant cost information for year 1. Using assumed rate of inflation, forecast annual costs over the next five years. Calculate net present worth of all cash outflow and inflows. The engine (gas vs. diesel) that has the greatest net present worth will be chosen.

Resources

Gas Mileage: Visit Dealership

Insurance Cost: contact insurance provider

Estimated Annual Maintenance: visit dealership, research consumer information

Fuel Costs: Average Southern California prices

Vehicle Licensing Fee: based on DMV calculation

Salvage Value: estimate percentage based on previous years