You are considering the purchase of a hybrid Honda CRV. Assume that you drive 12,000 per year, and will keep the auto for 10 years, at which time the car will have zero trade- in value. Assume the cost of gas is $3.00/gallon. The "normal" model gets 35 miles per gallon, while the "hybrid" model gets 40 miles per gallon. The hybrid model cost $34,325 while the normal model costs $29,035. All other operating costs are the same. You can invest your money at a 6% interest rate (i.e. use a 6% discount rate). Given these assumptions, is it a good economic decision to purchase the hybrid? Hint: Calculate the annual gas cost for each car then take the difference (or savings) per year. Next calculate the PV of the annual savings (END MODE) and compare the gas cost savings in today's dollars to the cost difference for the two vehicles. You could also do a NPV analysis, with the car cost difference being used for cash out time period o, and the savings entered in the CFj key for ten years. Look at the excel file in the modules for chapter 8 to see how changes in the variables changes the NPV for hybrid cars. O Yes, buy the hybrid. The PV of the savings is $946 which is greater than the cost difference i.e. the NPV is positive. O No, do not buy the hybrid. The PV of the savings is $3,560 which is less than the cost difference. You need a greater savings to economically justify the purchase of this hybrid (i.e. the NPV is negative). O No, don't buy the hybrid. The PV of the savings is $946 which is less than the cost difference. You need a greater savings to economically justify the purchase of this hybrid (i.e. the NPV is negative). O Yes, buy the hybrid. The NPV is a positive $597. Since the NPV is positive, this is a good deal. None of the above