Question: A newly-invested electric car will cost $21,000. Operation and maintenance costs, including recharging the battery at home, are estimated to be $350 each year. The salvage value after 5 years is estimated to be $6,500. A new gasoline car would cost $16,000 and average 30 miles per gallon. Gas costs are $1.26. Maintenance costs are estimated to be $300 perA newly-invested electric car will cost $21,000. Operation and maintenance costs, including recharging the battery at home, are estimated to be $350 each year. The salvage value after 5 years is estimated to be $6,500. A new gasoline car would cost $16,000 and average 30 miles per gallon. Gas costs are $1.26. Maintenance costs are estimated to be $300 per year including warranty coverage. The salvage value is estimated to be $1,500 after 5 years of service. If the vehicles are expected to be driven about 20,000 miles per year, determine which option will cost less than 5 years. Use present value analysis with an interest rate of 10%. Do not use Excel or any other software in solving this exercise. 100% (1 rating)By using present wo…View the full answer
