Find the breakeven mileage per year

Assignment Help Finance Basics

Reference no: EM131507058

Question: Refer to Example. Assuming gasoline costs $4.00 per gallon, find the breakeven mileage per year between the hybrid vehicle and the gas-only vehicle. All other factors remain the same.

Example: Two Alternative Breakeven Analysis: Hybrid Vehicles Gas-electric (so-called hybrid) vehicles save on gasoline consumption by shutting off the vehicle's engine while idling, giving the vehicle a boost of electric power during acceleration, and capturing electrical energy while braking. In addition to environmental benefits, the primary monetary benefit to the owner is reduced fuel cost as a result of improved gas mileage. The trade-off, however, is that the purchase price of the hybrid vehicle is higher than that of a standard gasoline-only fueled vehicle. 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 $28,000 and will average 25 miles per gallon of gasoline. Assuming an interest rate of 3% per year and a study period of five years, find the breakeven cost of gasoline ($/gal) if the vehicle will be driven 18,000 miles each year.

Reference no: EM131507058

Questions Cloud

Best practices for creating organizational units : Within companies, people are hired, fired, change departments, change their names, lose or forget their passwords.

Discuss the incremental b-c ratio : In the aftermath of Hurricane Thelma, the U.S. Army Corps of Engineers is considering two alternative approaches to protect a freshwater wetland.

Determine which bridge design should be selected : Extended Learning Exercise The Fox River is bordered on the east by Illinois Route 25 and on the west by Illinois Route 31.

How many customers per day will be required : The Metropolitan Transit Authority (MTA) has just opened a new subway line (the Orange Line) in its underground transportation network.

Find the breakeven mileage per year : Refer to Example. Assuming gasoline costs $4.00 per gallon, find the breakeven mileage per year between the hybrid vehicle and the gas-only vehicle.

How can learning about pauls journeys : Drawing upon what you have learned from the Book of Acts. How can learning about Paul's journeys help you better understand the establishment of the church?

Describe topic that you are currently attempting to learn : Describe one topic that you are currently attempting to learn. Explore your motivation for learning about the chosen topic.

How many miles do the tractors have to be driven per year : The Universal Postal Service is considering the possibility of fixing wind deflectors on the tops of 500 of their long-haul tractors.

Developing a management plan : You and your team have been tasked with developing a management plan and website for a housecleaning company called Sparkling Surfaces Cleaning Company.

User Account

All Pages