he Jose’s Pizza has one passenger van as delivery van. It is considering converting the passenger van to the cargo van. The conversion costs $4,000. The ROI is 12%. The cargo van is able to load twice as many as the passenger van does, therefore it could run half as many miles as the passenger van does. The mileage per year for the passenger van is 21,000 miles. The fuel mileage is 15 miles per gallon for the passenger van and 10 miles per gallon for the cargo van. The cost per gas is $3 per gallon. The van is expected to be kept for 4 years. Is this converting project good one?

Question

The Jose’s Pizza has one passenger van as delivery van. It is considering converting the passenger van to the cargo van. The conversion costs $4,000. The ROI is 12%. The cargo van is able to load twice as many as the passenger van does, therefore it could run half as many miles as the passenger van does. The mileage per year for the passenger van is 21,000 miles. The fuel mileage is 15 miles per gallon for the passenger van and 10 miles per gallon for the cargo van. The cost per gas is $3 per gallon. The van is expected to be kept for 4 years. Is this converting project good one?