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Cost Benefit Analysis – Hybrid Cars

Cost Benefit Analysis – Hybrid Cars. Presented by Mukesh Kakkar Jeff Graebner James Lepp. Agenda. What is Cost Benefit Analysis (CBA) Costs and Benefits Applications of CBA Steps involved Process Flow Hybrids Functioning Consumer opinion.

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Cost Benefit Analysis – Hybrid Cars

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  1. Cost Benefit Analysis – Hybrid Cars Presented by Mukesh Kakkar Jeff Graebner James Lepp

  2. Agenda • What is Cost Benefit Analysis (CBA) • Costs and Benefits • Applications of CBA • Steps involved • Process Flow • Hybrids • Functioning • Consumer opinion

  3. Benefits are primary positive outcomes or consequences Costs are value of the resources that must be used to develop, implement, and operate the program being analyzed Cost & Benefits

  4. Application of CBA • Whether or not project should be undertaken • Could the project be viable in future • Which among many competing alternatives and projects should be funded given a limited budget.

  5. CBA Drill-down tree

  6. CBA Process Flowchart Establish Objectives Identify Constraints Identify Assumptions Define Base case Define Alternatives Set Analysis period Define level of effort Estimate benefits and cost relative to base case Evaluate risks Compare net benefits and establish ranks Recommendations

  7. Hybrid Vehicles

  8. Functioning

  9. Opinions- facts or fiction

  10. Gas Prices

  11. Regressions • Moving Average • Simple Regression • Holt-Winters • Multiple Regression (3) • Time Series Decomposition • ARIMA

  12. Multiple Regression • Dependent Variable • Gas Price • Independent Variables • Significant • Consumer Price Index (CPI) • Average number of miles traveled per vehicle • 9/11 – dummy variable • Hurricane Katrina – dummy variable • War in Iraq – dummy variable • Quarters – dummy variables • Insignificant • Total number of hybrids on the road • Total number of light vehicles on the road • Personal Income • Motor Vehicle Output

  13. Statistics

  14. Forecast

  15. Vehicles Used in Study

  16. Benefits of a Hybrid • Savings at the Pump • All Hybrids get a better fuel economy than their counterparts • Lower Insurance Rates • Drop of 5 to 10% • Government Assistance • Federal Tax credit • Coase Theorem • Take a decentralized approach to environmental pollution • Lower Emissions • Less Carbon Monoxide adding to Global Warming • Self-Powering Engines • No hassle in finding a plug • Special Car-Pool Lanes • No matter how many people are in the car

  17. Costs of a Hybrid • General Maintenance and Repair • Even though it does have an electric engine it is still needed • New Batteries • Need to be changed out every 8 to 10 years • Higher Depreciation Rate • Expected as 1 to 4% higher • Higher Initial Cost • Between $4,000 and $9,000

  18. Inside the Numbers

  19. Inside the Numbers (Continued)

  20. The Results

  21. The Results (Continued)

  22. The Results (Continued)

  23. Questions "An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts - for support rather than for illumination."—Andrew Lang

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