A newly-invested electric car will cost $21,000. Operation and maintenance costs, including recharging the battery at ho
Posted: Wed Jul 06, 2022 5:59 am
A newly-invested electric car will cost $21,000. Operation andmaintenance costs, including recharging the battery at home, areestimated to be $350 each year. The salvage value after 5 years isestimated to be $6,500. A new gasoline car would cost $16,000 andaverage 30 miles per gallon. Gas costs are $1.26. Maintenance costsare estimated to be $300 per year including warranty coverage. Thesalvage value is estimated to be $1,500 after 5 years of service.If the vehicles are expected to be driven about 20,000 miles peryear, determine which option will cost less than 5 years. Usepresent value analysis with an interest rate of 10%. Do not useExcel or any other software in solving this exercise.