You Are Trying to Lease a Gasoline-Powered Car or a Hybrid

Multiple Choice

You are trying to lease a gasoline-powered car or a hybrid car based on cost considerations during the next 5 years that you plan to keep it. You plan to drive 12,000 miles per year. Ignore the effect of interest rates and time value of money. Leasing cost is $\$ 250$ per month for the gas-powered car and $\$ 325$ per month for the hybrid. Down payment is $\$ 0$ for both cars. 12,000 leasing miles are allowed per year for each car. Per mile charge for gas powered cars is $\$ 0.15$ and $\$ 0.05$ for hybrids. Which would be a better buy, from a cost minimization point of view?

A) Gas-powered
B) Hybrid
C) Either would be the same
D) None