Download Team 1: Gas vs. Diesel

Team 1: Truck Purchase
Gas 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’
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Gas Engine
6.8L V10 EFI
vs.
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Diesel Engine
6.0L Power Stroke
Turbo Diesel V8
Units of Comparison
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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