Re: Calculate savings on gas driving Prius
- From: kgold@xxxxxxxxxxxxxx (kgold)
- Date: 24 Aug 2005 13:29:11 GMT
"Chuck Olson" <chuckolson01@xxxxxxxxxxxxxxxxxxxxx> writes:
> Given: MPM (miles per month), $PG (dollars per gallon), MPG1 (previous miles
> per gallon), MPG2 (new miles per gallon)
>
> Find: SAV (savings in $ per month)
>
> SAV = MPM x $PG x (1 / MPG1 - 1 / MPG2)
>
> If you have an HP17BII calculator, you can enter the equation as written in
> "SOLVE" mode and the 5 quantities will label 5 top-row keys. Then you can
> input any 4 quantities (by pressing the numbers and then the labeled key for
> each) and pressing the 5th labeled key will display the calculated value.
>
> Sample Calculation: MPM = 1400, $PG = 3, MPG1 = 15, MPG2 = 55
>
> SAV = 203.64
>
> So this says the SUV I drive 30 miles to work and back 5 days a week, and
> average 50 miles on weekends costs me $203.64 a month more than it would if
> I drove a Prius. In a year the Prius would save me $2443.64 on my gas bill.
> If the trade-in on my SUV is $15,000, I would break even in 4.09 years. If
> the price of gas goes up, I would break even sooner - in fact if over the
> next few years the price of gas averages $4/gal, the break-even time would
> be 3.07 years. This does not account for any variation in trade-in value at
> different car dealerships so I assume Toyota allows the same as any other
> make, dropping it out of the calculation.
>
> If you think rewarding Toyota the $10,000 difference for their development
> of this hybrid system is better than paying it to Shell Oil and adding to
> the world's pollution for 4 years, it should be an easy choice.
The obvious omission is the "time cost of money".
You lay out the $10K in 2005 dollars, but the savings is in future
dollars. E.g., if you could invest the $10K at 5%, your Prius is
costing you another $500 a year.
--
Ken Goldman kgold@xxxxxxxxxxxxxx 914-784-7646
.
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