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Recently, I bought an e-bike to commute to work. Since I expect to save on gasoline costs for my car, the e-bike should be a
Recently, I bought an e-bike to commute to work. Since I expect to save on gasoline costs for my car, the e-bike should be a good investment. Suppose the e-bike cost $2,000. I project that over the life of the bike, gasoline will cost on average $1.80 per litre. Also, my car consumes 10.2L/100km. Also suppose I live 13km from work (one way). (a) How many total days do I need to ride to work for the bike to pay for itself? (Assume the operating costs of the bike are zero). (b) Assume I expect to ride no more than 60 times per year. Find the discounted payback period (in years) assuming interest rates are 4.25%. (Assume all the expenses associated with driving occur at the end of each year.) The discounted payback period is between and years. (c) If I don't ride often enough, the bike will never pay for itself. What is the fewest times per year I need to ride to ensure the discounted payback period is finite
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