Question

It costs $27,000 to retrofit the gasoline pumps at a certain filling station so the pumps can dispense E85 fuel (85% ethanol and 15% gasoline). If the station makes a profit of $0.08 per gallon from selling E85 and sells an average of 24,000 gallons of E85 per month how many months will it take for the owner to recoup her $27,000 investment in the retrofitted pumps?

Answer 1

It would take the filling station owner 15 full months to recoup her $27,000 investment in the retrofitted pumps, by selling 24,000 gallons of E85 fuel each month and making a profit of $0.08 per gallon.

Step-by-step explanation:

The question asks how many months it will take for the owner of a filling station to recoup a $27,000 investment in retrofitted pumps that dispense E85 fuel by making a profit of $0.08 per gallon. To find the answer, we need to calculate the total profit per month and divide the initial investment by this figure.

First step is to calculate the monthly profit:

• Profit per gallon: $0.08
• Gallons sold per month: 24,000 gallons
• Monthly profit: $0.08 per gallon × 24,000 gallons = $1,920 per month

To recover the investment:

1. Total investment: $27,000
2. Monthly profit: $1,920
3. Months to recoup investment: $27,000 ÷ $1,920 per month = 14.0625 months

Since we cannot have a fraction of a month, it would take the owner 15 full months to recoup the investment in the retrofitted pumps, considering she sells 24,000 gallons of E85 each month.