Question is: Which would be more effective- a conventional car (uses gas) or a hybrid car (uses gas and electric battery)?

CHAPTER 15 Working Capital and Current Assets Management ce Example 15.4 Individuals sometimes are confronted with personal finance tween the fixed order costs and variable carrying costs of inventory that corpora tions face. Take the case of the von Dammes, who are trying to decide whether a decisions involving cost trade-offs similar to the trade-off be- 665 be more cost effective. The von Dammes plan to keep whichever car they choose for 3 years s and'ex- pect to drive it 12,000 miles in each of those years. They will use the same dollar amount of financing repaid under the same terms for either car, and they expect the cars to have identical repair costs over the 3-year ownership period. They also assume that the trade-in value of the two cars at the end of 3 years will be identi- cal. Both cars use regular unleaded gas, which they estimate will cost, on average, $3.20 per gallon over the 3 years. The key data for each car are as follows: Total cost Average miles per gallon Conventional $24,500 27 Hybrid $27,300 42