Hybrid cars are touted as a "green" alternative; however, the financial aspects of hybrid ownership are not as clear. Consider the 2010 Lexus RX 450h, which had a list price of $5,565 (including tax consequences) more than the comparable Lexus RX 350. Additionally, the annual ownership costs (other than fuel) for the hybrid were expected to be $300 more than the traditional sedan. The EPA mileage estimate was 29 mpg for the hybrid and 21 mpg for the traditional sedan.

a.

Assume that gasoline costs $3.25 per gallon and you plan to keep either car for six years. How many miles per year would you need to drive to make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not round intermediate calculations and round your final answer to nearest whole number. (e.g., 32))

Miles per year

b.	If you drive 15,000 miles per year and keep either car for six years, what price per gallon would make the decision to buy the hybrid worthwhile, ignoring the time value of money? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Price per gallon

$