Deciding between the purchases of two cars

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Suppose you are deciding between the purchases of two cars: the $21,545 Ford Escape or the $25,740 Ford Escape Hybrid. The vehicles are essentially identical except the Hybrid gets 34 mpg while the regular Escape gets 24 mpg. a) If you drive 15,000 miles per year, you expect to own the car for 8 years (at which time both vehicles will have the same value), the discount rate is 7%, and the expected price of gas is $2.75 gallon, which vehicle should you purchase? Justify your answer.

Reference no: EM13898616

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