Question
In: Finance
Fabrice is looking to buy a new plug-in hybrid vehicle. The purchase price is $14,000 more...
Fabrice is looking to buy a new plug-in hybrid vehicle. The
purchase price is $14,000 more than a similar conventional model.
However, he will receive a $6,300 federal tax credit that he will
realize at the end of the year. He estimates that he will save
$1,300 per year in gas over the conventional model; these cash
outflows can be assumed to occur at the end of the year. The cost
of capital (or interest rate) for Fabrice is 6%. How long will
Fabrice have to own the vehicle to justify the additional expense
over the conventional model? In other words, what is the DISCOUNTED
payback period in years? Discount future cash flows before
calculating payback rounded UP to a whole year. (Enter just the
number without comma and round off decimals.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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