Hybrid cars are touted as a "green" alternative; however, the financial aspects of hybrid ownership are not as clear. Consider the 2020 Edsel 550h, which had a list price of $5,700 (including tax consequences) more than the comparable gasoline-only Edsel 550. Additionally, the annual ownership costs (other than fuel) for the hybrid were expected to be $490 more than the traditional sedan. The EPA mileage estimate was 28 mpg for the hybrid and 20 mpg for the traditional sedan. a. Assume that gasoline costs $3.90 per gallon and you plan to keep either car for six years. How many miles per year would you need to drive to make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not round intermediate calculations and round your answer to nearest whole number, e.g., 32.) b. If you drive 16,000 miles per year and keep either car for six years, what price per gallon would make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Hybrid cars are touted as a "green" alternative; however, the financial aspects of hybrid ownership are not as clear. Consider the 2020 Edsel 550h, which had a list price of $5,700 (including tax consequences) more than the comparable gasoline-only Edsel 550. Additionally, the annual ownership costs (other than fuel) for the hybrid were expected to be $490 more than the traditional sedan. The EPA mileage estimate was 28 mpg for the hybrid and 20 mpg for the traditional sedan. a. Assume that gasoline costs $3.90 per gallon and you plan to keep either car for six years. How many miles per year would you need to drive to make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not round intermediate calculations and round your answer to nearest whole number, e.g., 32.) b. If you drive 16,000 miles per year and keep either car for six years, what price per gallon would make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter14: The Balanced Scorecard And Corporate Social Responsibility

Section: Chapter Questions

Problem 1MAD: Den-Tex Company is evaluating a proposal to replace its HID (high intensity discharge) lighting with...

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Hybrid cars are touted as a "green" alternative; however, the financial aspects of hybrid ownership are not as clear. Consider the 2020 Edsel 550h, which had a list price of $5,300 (including tax consequences) more than the comparable gasoline-only Edsel 550. Additionally, the annual ownership costs (other than fuel) for the hybrid were expected to be $340 more than the traditional sedan. The EPA mileage estimate was 28 mpg for the hybrid and 20 mpg for the traditional sedan. a. Assume that gasoline costs $3.15 per gallon and you plan to keep either car for six years. How many miles per year would you need to drive to make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not round intermediate calculations and round your answer to nearest whole number, e. g., 32.) b. If you drive 15, 500 miles per year and keep either car for six years, what price per gallon would make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not…
You are trying to decide which of the two automobiles to buy. The first is American-made costs $14288. And has a rated gasoline mileage of 27 miles/gal. The second car is European manufacture , costs $20324. And has a rated mileage of 19km/L. If the cost of gasoline is $1.22 gal/L and if the cars actually deliver their rated mileage, estimate how many miles would you have to drive for the lower fuel consumption of the second car to compensate for the higher cost of this car?
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