Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Consider a hybrid vehicle with a sticker price of $31,500. This vehicle will average 30 miles
per gallon of gasoline. A tax credit of $1,500 for the hybrid vehicle effectively reduces its
sticker price to $30,000. A comparably equipped gasoline-only vehicle will cost $28,000
and will average 25 miles per gallon of gasoline. Assuming an interest rate of 3% per year
and a study period of five years, find the breakeven mileage per year between the hybrid
vehicle and the gas-only vehicle. All other factors remain the same and assuming the
gasoline costs $4.00 per gallon.
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Transcribed Image Text:Consider a hybrid vehicle with a sticker price of $31,500. This vehicle will average 30 miles per gallon of gasoline. A tax credit of $1,500 for the hybrid vehicle effectively reduces its sticker price to $30,000. A comparably equipped gasoline-only vehicle will cost $28,000 and will average 25 miles per gallon of gasoline. Assuming an interest rate of 3% per year and a study period of five years, find the breakeven mileage per year between the hybrid vehicle and the gas-only vehicle. All other factors remain the same and assuming the gasoline costs $4.00 per gallon.
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