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Consider a hybrid ( gas - electric ) vehicle with a sticker price of $ 3 1 , 5 0 0 . This vehicle will

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Consider a hybrid (gas-electric) vehicle with a sticker price of $31,500. This vehicle will average 30 miles per gallon of gasoline. A tax credit of $1,500 for the hybrid vehicle is being awarded and thus it effectively reduces its sticker price to $30,000. A comparably equipped gasoline-only vehicle will cost $28,000 and will average 25 miles per gallon of gasoline.
a) Assuming gasoline costs of $4.00 per gallon, an interest rate of 3% per year and a study period of five years, find the breakeven mileage per year between the hybrid vehicle and the gas-only vehicle.
b) What is the recommended vehicle to purchase if the total mileage per year equals 20,000 miles?
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