Next, we perform 2-variable sensitivity analyses over ranges of plausible values for the two variables by calculating the discount payback which is simply the number of years it entails to breakeven the extra $2,025 upfront payment for the all-electric Nissan Leaf. For the Prius, we choose gas price as the variable for a range of 2.00 $/gallon to 6.00 $/gallon over a 50-increment.For the Leaf, we choose three variables, namely the interest rate from 0% to 6% per year, electric supply rate from 8/kWh to 16/kWh, and tax credit for buying the electric car from $0 (the base-case analysis above) to $2,000 at $500 increment. Beware of the #NUM! output when applying the Excel's Data, What-if Analysis, Data Table mode. They are not spurious output but do have their own significant economic interpretation. Those who need help with the Data Table function in Excel, please refer to the Appendix where a similar numerical example was presented as an illustration.

We expect three output tables as follow:

Gas price, $/gallon

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

Interest rate, % p.a.

0

1

2

3

4

5

6

Table 1: Discounted payback, in years, of an all-electric Leaf over the hybrid Prius at various gas prices and various auto loan interest rates.(20%)

Gas price, $/gallon

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

Electricity rate,/kWh

8

9

10

11

12

13

14

15

16

Table 2: Discounted payback, in years, of an all-electric Leaf over the hybrid Prius at various gas prices and various electricity supply charge rates.(20%)

Gas price, $/gallon

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

Tax credit for electric car, $

0

500

1500

2000

2025

Table 3: Discounted payback, in years of an all-electric Leaf over the hybrid Prius at various gas prices and various tax credit levels.(20%)

Q5: What does the output #NUM! mean financially in Table 1 if you change the price spread from $2,025 to $4,000? Use numbers to justify your answer.

Now, change the price spread back to $2,025 before answer the following questions.

Q6: From Table 1, make twoceteris paribusstatements on the discounted payback on each variable. Then, make another combined statement on discounted payback's trend based on both variables.(20%)

Q7: From Table 2, make twoceteris paribusstatements on the discounted payback on each variable. Then, make another combined statement on discounted payback's trend based on both variables.

(20%)

Q8: From Table 3, make twoceteris paribusstatements on the discounted payback on each variable. Then, make another combined statement on discounted payback's trend based on both variables.