Toyota will bring hybrid electric automobiles to market next year priced at $30,000 (this includes a $7,500 federal tax credit). At $2.00 per gallon ofgasoline, it will take 10 years to recoup the difference in price between a base model Toyota Camry and its four-cylinder gasoline-only counterpart. The price difference is $3,720. If the hybrid vehicle is driven for 15 years, what is the internal rate of return on the extra investment in the hybrid?

Toyota will bring hybrid electric automobiles to market next year priced at $30,000 (this includes a $7,500 federal tax credit). At $2.00 per gallon ofgasoline, it will take 10 years to recoup the difference in price between a base model Toyota Camry and its four-cylinder gasoline-only counterpart. The price difference is $3,720. If the hybrid vehicle is driven for 15 years, what is the internal rate of return on the extra investment in the hybrid?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 8P: The Rodriguez Company is considering an average-risk investment in a mineral water spring project...

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Toyota will bring hybrid electric automobiles to market next year priced at $32,000 (this includes a $8,000 federal tax credit). At $1.83 per gallon of gasoline, it will take 11 years to recoup the difference in price between a base model Toyota Camry and its four-cylinder gasoline-only counterpart. The price difference is $4,180. If the hybrid vehicle is driven for 16 years, what is the internal rate of return on the extra investment in the hybrid? The internal rate of return on the extra investment in the hybrid is%. (Round to one decimal place.)
K Toyota will bring hybrid electric automobiles to market next year priced at $34,000 (this includes a $8,500 federal tax credit) At $1.98 per gallon of gasoline, it will take 8 years to recoup the difference in price between a base model Toyota Camry and its four-cylinder gasoline-only counterpart The price difference is $3,040 If the hybrid vehicle is driven for 10 years, what is the internal rate of return on the extra investment in the hybrid? ... The internal rate of return on the extra investment in the hybrid is % (Round to one decimal place)
Consider a hybrid vehicle with a price of $30,000. This vehicle will average 30 miles per gallon of gasoline. 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.
Toyota will bring hybrid electric automobiles to market next year priced at $33,000 (this includes a $8250 federal tax credit). At $2.04 per gallon of gasoline, it will take 8 years to recoup the difference in price between a base model Toyota Camry and its four-cylinder gasoline-only counterpart. The price difference is $3120. If the hybrid vehicle is driven for 12 years, what is the internal rate of return on the extra investment in the hybrid? The internal rate of return on the extra investment in the hybrid is _______%. (Round to one decimal place.)
Consider a hybrid vehicle with a sticker price of $31,500. This vehicle will average 30 milesper gallon of gasoline. A tax credit of $1,500 for the hybrid vehicle effectively reduces itssticker price to $30,000. A comparably equipped gasoline-only vehicle will cost $28,000and will average 25 miles per gallon of gasoline. Assuming an interest rate of 3% per yearand a study period of five years, find the breakeven mileage per year between the hybridvehicle and the gas-only vehicle. All other factors remain the same and assuming thegasoline costs $4.00 per gallon.
A delivery company is looking at converting their fleet of gasoline vans to electric vehicles. The all electric vans cost $75,000.00 today, minus an electric vehicle tax credit $7,500.00 and the reduced maintenance and fuel cost of $5,000. This brings today's MRC to $62,500.00 for each new electric van. The newer vans are expected to increase future MRP by $12,000.00 each year and have a productive life for five years. At the end of the fifth year, the firm expects to sell the used vans for a salvage value of $30,000.00. This firm is borrowing funds at 6% interest. The table indicates the possible investment for one electric vehicle.
The owner of an alcohol car is concerned about government policy with regard to fuel prices. It is estimated that gasoline will rise by 3% per year and ethanol by 5% per year in real terms. The current cost of gasoline is $3.00 per liter. The average consumption of your car is 9 km/liter and it runs around 20,000 km/month. Assuming a minimum active rate of return of 10% per year in real terms, compare for a 4-year horizon the equivalent annual cost of consumption of your car and a gasoline car, with the consumption of the alcohol car being 20% higher, and the price of a liter of alcohol today corresponds to 80% of the price of a liter of gasoline.
A delivery company is looking at converting their fleet of gasoline vans to electric vehiclesThe all electric vans cost $75,000.00 today, minus an electric vehicle tax credit $7,500.00 and the reduced maintenance and fuel cost of $5,000. This brings today’s MRC to $62,500.00 for each new electric vanThe newer vans are expected to increase future MRP by $ 12,000.00 each year and have a productive life for five years. At the enc of the fifth year, the firm expects to sell the used vans for a salvage value of 30,000.00This firm is ing funds at 6% interest. The table indicates the possible investment for one electric vehicle.
A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 2 mpg of gasoline. The extra cost of a CVT is $900 on the sticker price of a new car. For a particular model averaging 27 miles per gallon with the CVT, what is the cost of gasoline (dollars per gallon) that makes this option affordable when the buyer's interest rate is 9% per year? The car will be driven 110,000 miles uniformly over an eight-year period. The cost of gasoline that makes this option affordable is ______ per gallon
A concept car that will get 100 miles per gallon and carry four persons would have a carbon-fiber and aluminum composite frame with a 900 cc three-cylinder turbodiesel/electric hybrid power plant. The extra cost of these technologies is estimated to be $11,000. (a) If gasoline savings over a comparable conventional car would be $900 in year one, increasing by 10% each year, what is the present worth of the savings over a 10-year period at an interest rate of 8% per year? (b) Compare the present worth values to determine if the extra cost is recovered by fuel savings.
Honda Motor Company is considering offering a $1,000 rebate on its minivan, lowering the vehicle's price from $31,000 to $30,000. The marketing group estimates that this rebate will increase sales over the next year from 25,000 to 29,000 vehicles. Suppose Honda's profit margin with the rebels is 15.000 per vetide What will be the benefit of the rebate? A. $24 million B. $25 million OC. $5 million OD. $20 million
You plan to purchase a car for $28,000. Its market value will decrease by 20% per year. You have determined that the IRS-allowed mileage reimbursement rate for business travel is about right for fuel and maintenance at $0.485 per mile in the 1st year. You anticipate that it will go up at a rate of 10% each year, with the price of oil rising, influencing gasoline, oils, greases, tires, and so on. You normally drive 15,000 miles per year. Your MARR is 9%. What is the optimum replacement interval for the car? Show the EUAC value used to reach your decision: $?