The transportation department will purchase five new buses. Complete an analysis of the cost for each type of bus (diesel, propane, and electric), assuming no government grants are received, and recommend which buses to purchase based on this analysis. Assume that the average lifespan of a school bus is 15 years, and the interest rate for the school district is 7 percent. Appendix A provides data to compare the purchase of each type of bus. Appendix B provides details on Grenze’s current bus fleet. (Hint: First, determine the cost for one bus of each type.)
The analysis of this case requires students to identify the relevant costs throughout the case and appendices. Students should identify the following relevant costs:
There is also irrelevant information in the case and appendices that students should not include in their analysis, including sunk costs (e.g., diesel fuel pump).
For less experienced students, the...
