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Calculate the npv of the additional investment

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Reference no: EM133093688

Question - Mariam is considering purchasing a Honda Civic (MPG = 28) or a Prius (MPG = 45) for her commute to work. On average, she drives 45,500 miles a year. The Prius would cost her 12,000 more than the Civic. If the average gas price is $4.50 for the next five years, help Mariam decide which car would provide a better return on her investment if she plans to buy a new car at the end of 5 years and the resale value of the Prius is $6,000 higher compared to the Civic. If she decides to opt for the Prius, calculate the NPV of the additional investment if her cost of funds is 8%.

Reference no: EM133093688

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