Genesis: This exercise was inspired by a failed, government program circa 2009.Essentially, the Federal Government paid $ 4500 for any vehicle, irrespective of condition, if traded in on a new vehicle if the new unit's fuel-economy rating were 4 mpg or better, relative to the trade-in. Data in fact panel # 1 were obtained from the Ford and Toyota corporate websites.

Fact Panel # 1

Focus SPrius Two

MSRP$ 16,500$ 24,000

MPG (most favorable)3651

Replacement battery cost$ 120$ 2,800

Anticipated life 6 years8 years

Panel # 2:usage assumptions; apply to both vehicles

Miles driven annually 15,000

Service life10 years

Cost of gasoline $ 2.50 per gallon

Panel # 3:Your task

Do not introduce any assumptions other than those presented on page 1.

Do a cost/benefit analysis.Use the total cost of ownership across the entire service period as your decision rule.Make a recommendation as if you were suggesting an optimal purchase decision for a treasured family member.

Show your work.