Hybrid cars are touted as a "green" alternative; however, the financial aspects of hybrid ownership are not as clear. consider the 2018 edsel 550h, which had a list price of $5,100 (including tax consequences) more than the comparable edsel 550. additionally, the annual ownership costs (other than fuel) for the hybrid were expected to be $430 more than the traditional sedan. the epa mileage estimate was 28 mpg for the hybrid and 20 mpg for the traditional sedan.

a. assume that gasoline costs $3.60 per gallon and you plan to keep either car for six years. how many miles per year would you need to drive to make the decision to buy the hybrid worthwhile, ignoring the time value of money? (do not round intermediate calculations and round your answer to nearest whole number, e. g., 32.)

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine