Hybrid Case Final Essay

Submitted By zreed1201
Words: 732
Pages: 3
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Hybrid Car Valuation Report
Team Members:
Sagar Bhika, Zach Reed, Emily Kendall, and Trevor Daniel
FINA 4210
MWF 12:20-1:10pm

We have decided to compare the hybrid and non-hybrid car versions of the Toyota Camry. The Camry is a popular car amongst many young and old individuals. Its reliability, comfort, and gas-saving characteristics is what makes it so popular to the public. Our report will aim to analyze and determine which car is better suited for cost efficiency and cost savings over a ten year time horizon. The regular Camry is priced roughly around $22,970 MSRP, while the hybrid Camry comes in at roughly $26,790 MSRP. These two figures will be our starting point in determining which car is the better buy.
There are a variety of factors to consider when deciding whether to purchase a hybrid or a non-hybrid. The Camry Hybrid is priced at a 16.63% premium compared to the non-hybrid version. Meaning that the savings on gas and maintenance must offset that over a 10 year period. Both options have a 17 gallon tank, meaning that the hybrid will be able to get an average of 731 miles on one tank, while the non-hybrid will get 425 miles. Maintenance costs will be fairly similar, but we factored in replacing the hybrid battery once in year 7. Also, hybrids do not need to have their brake pads changed regularly because they do not wear at the same rate as non-hybrids. Another advantage to owning a hybrid is that they usually come with lower insurance costs, although we did not factor that into our cost analysis. Outside of the financial differences, many consumers value the reduced emissions and decreasing their carbon footprint.
There are many parameters that can be taken into consideration when analyzing two different cars, however for our particular scenario we are using monthly maintenance cost, battery replacements, tire rotations, tire replacement costs, and wheel alignment costs. We are also using expected inflation to determine future gas prices and cost of monthly fuel. These are the basic parameters being used in this cash flow analysis. Our discount rate is a conservative 5%. We used this conservative figure because we expect the future economy to prosper giving us more opportunities to pay for our costs upfront. In terms of cost savings it is much more efficient to drive the hybrid car. On average the tradeoff between the hybrid and non-hybrid is half the gas cost of the non-hybrid. Over the long run this makes a huge difference not only in terms of gas, but also in terms of consumption and wealth maximization. Every dollar saved can be put towards the stock market to increase wealth and future consumption. Maintenance costs stay consistent throughout both vehicles. The cost of maintenance is something that will always remain present in any vehicle. However, eventually the higher
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