Flag question Alexis decided to purchase a new automobile. Being concerned about environmental issues, she is leaning toward the hybrid rat than the gasoline only model. Nevertheless, as a new business school graduate, she wants to determine if there is an economic justification for purchasing the hybrid, which costs $2,160 more than the regular model. She has determined that city/highway combined gas mileage of the hybrid and regular models are 30 and 24 miles per gallon respectively. Alexis anticipates she will tra an average of 18,000 miles per year for the next several years. Present Value of $1 Period 4% 1 0.96154 B 2 0.92456 3 0.88900 4 0.85480 Assuming that Allexis plans to keep the car about 5 years and does not believe there will be a trade-in premium associated with the hybrid model, determine the net present value of the incremental investment at 4 percent time value of money. Select one: O a. $-1,800 O b. $156.68 O C.-156.68 O d. $2,160
Flag question Alexis decided to purchase a new automobile. Being concerned about environmental issues, she is leaning toward the hybrid rat than the gasoline only model. Nevertheless, as a new business school graduate, she wants to determine if there is an economic justification for purchasing the hybrid, which costs $2,160 more than the regular model. She has determined that city/highway combined gas mileage of the hybrid and regular models are 30 and 24 miles per gallon respectively. Alexis anticipates she will tra an average of 18,000 miles per year for the next several years. Present Value of $1 Period 4% 1 0.96154 B 2 0.92456 3 0.88900 4 0.85480 Assuming that Allexis plans to keep the car about 5 years and does not believe there will be a trade-in premium associated with the hybrid model, determine the net present value of the incremental investment at 4 percent time value of money. Select one: O a. $-1,800 O b. $156.68 O C.-156.68 O d. $2,160
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 41P
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Transcribed Image Text:Flag question
Alexis decided to purchase a new automobile. Being concerned about environmental issues, she is leaning toward the hybrid rat
than the gasoline only model. Nevertheless, as a new business school graduate, she wants to determine if there is an economic
justification for purchasing the hybrid, which costs $2,160 more than the regular model. She has determined that city/highway
combined gas mileage of the hybrid and regular models are 30 and 24 miles per gallon respectively. Alexis anticipates she will tra
an average of 18,000 miles per year for the next several years.
Present Value of $1
Period
4%
1 0.96154
B
2 0.92456
3 0.88900
4 0.85480
Assuming that Allexis plans to keep the car about 5 years and does not believe there will be a trade-in premium associated with the
hybrid model, determine the net present value of the incremental investment at 4 percent time value of money.
Select one:
O
a. $-1,800
O
b. $156.68
O
C.-156.68
O
d. $2,160
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