Neela, a recent Babson graduate, is evaluating two new car leases. The "Solis" is an all-electric sedan which leases for $450.00 per month. The "eStrella" is a hybrid SUV, which leases for $400.00 per month. Neela estimates the electric cost per mile if she leases the Solis will be $0.045. As the hybrid runs on gas plus electric it creates itself, she estimates the gasoline cost per mile if she leases the eStrella will be $0.06 based on average gallon of gas of $3.00 and the eStrella getting 50 miles per gallon. Based on this information, what is the number of annual miles driven, (the Point of Indifference) where the annual lease and fuel costs of operating each car would be the same?

3,333.33

10,000

30,000

40,000

There is no POI. The annual lease and fuel costs of driving the "eStrella" hybrid will always be lower than the all-electric "Solis"