You are considering buying a gas-hybrid automobile. It costs $6,000 more than the standard gasoline engine model but doubles gasoline mileage from 25 miles per gallon to 50 miles per gallon. Gasoline is priced at $3.00 per gallon, you drive 10,000 miles per year, and you pay all gasoline bills at the end of the year. Your discount rate is 10 percent and you will scrap the car at the end of 10 years.

A- Does your purchase make financial sense? Why or why not?

B- If not, how much extra are you paying (i.e., how much are you contributing to the environment)?