You have to make a decision between a gasoline car and a hybrid car. The hybrid car costs $63,565 and gets a combined miles per gallon 29 with a 17.2 gallon tank. The gas car is $58, 230 with 21 combined mpg and a 19.2 gallon fuel tank. The bank loan rate is 3.25%. Both cars have a sales tax of 6%, registration fees of $35, tag transfer fee of $10, title fees of $100, and title tax of 6%. You drive 8000 miles per year with the cost of regular gas at $3.354 per gallon. Assume you plan on keeping the car for 10 years and that the resale value of both models will be negligible. Assume the loan period is for 10 years as well.

What is the total cost of driving each model for one year?

Calculate the NPV of both models using the annual fuel savings as the annual cash inflow for the 10 years you would own the car.

Compute the payback period of both models using the difference between the cost of the hybrid model and the gasoline model as the investment. Ignoring the time value of money, how long does it take for the additional cost of the hybrid model to pay for itself through fuel savings?

Please show all calculations do not use excel formulas

Answer rating: 100% (QA)

a Total cost of the hybrid car for one year 63565106 67592 675923510100 67737 Total cost of gas for ... View the full answer