Toyota will bring hybrid electric automobiles to market next year priced at $33,000 (this includes a $8,250 federal tax credit).At $1.89 per gallon of gasoline, it will take 11 years to recoup the difference in price between a base model Toyota Camryand its four-cylinder gasoline-only counterpart. The price difference is $4,290. If the hybrid vehicle is driven for 14 years,what is the internal rate of return on the extra investment in the hybrid?The internal rate of return on the extra investment in the hybrid is %. (Round to one decimal place.)

Information Provided: Price difference = $4290 Payback Period = 11 years Years driven = 14 years

Answered: The internal rate of return on the…

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The internal rate of return on the extra investment in the hybrid is %. (Round to one decimal place.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Toyota will bring hybrid electric automobiles to market next year priced at $33,000 (this includes a $8,250 federal tax credit).
At $1.89 per gallon of gasoline, it will take 11 years to recoup the difference in price between a base model Toyota Camry
and its four-cylinder gasoline-only counterpart. The price difference is $4,290. If the hybrid vehicle is driven for 14 years,
what is the internal rate of return on the extra investment in the hybrid?
The internal rate of return on the extra investment in the hybrid is %. (Round to one decimal place.)

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