Payback Period and NPV of a Cost Reduction Proposal$$Differential Analysis

VUE and regular VUE models are $27$ and $23$ miles per gallon respectively. Mary anticipates she will travel an average of $12,000$ miles per year for the next several years.

$($Round all of your answers to two decimal places. For example, enter $8\mathrm{.}84$ for $8\mathrm{.}844$ and $8\mathrm{.}85$ for $8\mathrm{.}845..)$

$($a$)$ Determine the payback period of the incremental investment if gasoline costs $$3\mathrm{.}50$ per gallon.

years

time value of money. $($Use a negative sign with your answer.$)$

$$(419\mathrm{.}77)$

$($c$)$ Determine the cost of gasoline required for a payback period of three years.

$

per gallon

$($d$)$ At $$3\mathrm{.}50$ per gallon, determine the VUE Green combined gas mileage required for a payback period of three years.

$31\mathrm{.}67$

miles per gallon