EC Math Propane Buy vs Rent

For this project, you're going to investigate the 'break even' point between owning and renting a 500 gallon propane tank.

You are going to determine whether buying or renting a 500 gallon propane tank is going to be cheaper in the long run.

You don't have to pay an annual tank rental fee
All you have to pay for is the propane when it needs to be refilled

You don't have to buy the propane tank (average cost $1200 to $1800+)

Use the formula below to determine the cost of purchasing your propane tank.

d = the day of your birth.

For example, if you were born on March 16, 'd' would be 16.

Tank cost = $1,200 + (d * 20)

For a person born on the 16th, the total cost to purchase a propane tank would be $1,200 + (16*20) = $1,520

Use the formula below to determine the annual cost of renting a propane tank.

d = the day of your birth. For a person born on the 16th, 'd' would be 16.

Tank rental cost = 60+(4*d) = $124

The tank rental company sells propane for $2.76/gallon.

You must use their propane in your rental tank. You cannot fill your rental tank with propane from another company. They will not allow it.

How much will it cost if your family uses 1,250 gallons of propane a year and propane costs $2.76/gal from the company that also rents you the tank?

* Indicates required field

Name *

First

Last

Period *

2nd 3rd 4th

What will be your propane cost to buy 1,250 gallons from the rental company? *

Add the cost to buy 1,250 gallons of propane to your annual cost to rent the tank. What is your total annual cost? *

One benefit of owning your own tank is you can buy propane from any company you want.

Suppose you find a company that will sell you propane for $2.47/gallon if you own your own tank.

How much will it cost if you can buy the same amount of 1,250 gallons of propane for only $2.47/gallon? *

Submit

We need to analyze our calculations and determine what we should do (rent or buy)

The following example of how to do this is for someone who was born on the 32nd of the month. Obviously, this is not reality because no months have 32 days.

Data we have calculated that is important for this project:

If you buy your own propane tank

The formula to calculate the purchase price is $1,200 + d*20. So, if d = 32, the formula is $1,200 + 20*32 = $1,200 + $640 = $1,840

Then, the cost to buy 1,250 gallons of propane is 1,250 * $2.47 = $3087.50

If you rent your propane tank

The formula to calculate the monthly rental cost is $60 + d*4. So, if d = 32, the formula is $60 + 32*4 = $60 + $128 = $188.

Then, the cost to buy 1,250 gallons of propane is 1,250 * $2.76 = $3,450

The total annual cost would be $188 (rental) + $3,450 (propane) = $3,638

So, it seems like owning your own tank is cheaper, but you had to pay $1,840 to buy the tank.

Calculations: Rent vs. Buy

* Indicates required field

Name *

First

Last

Enter your total cost to rent a tank for a year and buy 1,250 gallons of propane at $2.76/gal (you calculated this before). *

Enter the cost for you to buy a propane tank based on your birth day. (you calculated this before) *

Enter the cost to buy 1,250 gallons of propane at $2.47/gal. This is how much it will cost you if you own your tank. (you calculated this before). *

How much cheaper will it be every year if you buy your propane tank instead of rent it? *

Submit

For this project, you're going to investigate the 'break even' point between owning and renting a 500 gallon propane tank.

You are going to determine whether buying or renting a 500 gallon propane tank is going to be cheaper in the long run.

Calculating Your Cost to Purchase

Your Annual Cost to Rent

How much will it cost if your family uses 1,250 gallons of propane a year and propane costs $2.76/gal from the company that also rents you the tank?

We need to analyze our calculations and determine what we should do (rent or buy)

Calculations: Rent vs. Buy

Final Analysis