Environmental issues-gasoline four-cylinder model

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Mary Zimmerman decided to purchase a new automobile. Being concerned about environmental issues, she is leaning toward the hybrid rather than the completely gasoline four-cylinder model. Nevertheless, as a new business school graduate, she wants to determine if there is an economic justification for purchasing the hybrid, which costs $1,400 more than the regular VUE. She has determined that city/highway combined gas mileage of the Green VUE and regular VUE models are 27 and 23 miles per gallon respectively. Mary anticipates she will travel an average of 12,000 miles per year for the next several years.

(Round your answers to two decimal places.)

(a) Determine the payback period of the incremental investment if gasoline costs $3.60 per gallon.

Reference no: EM13826841

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