Suppose you want to buy a Tesla Model S, an all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multicoat armor paint, Tech Package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2013 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally, your total finance charge is $7,000. Applying the price equation, what is your final price for the Tesla Model S?
A) $57,000
B) $68,000
C) $87,500
D) $107,000
E) $151,000

Question

Quizplus · Accepted Answer

The final price is calculated as follows: Start with the base price of $87,500, add options and warranty ($17,500 + $5,000), subtract the dealer rebate ($5,000), subtract the trade-in allowance ($7,000), add sales tax, registration, and destination charge ($10,000 + $1,000 + $1,000), subtract state rebate and federal tax credit ($2,500 + $7,500), and add the finance charge ($7,000). The final price is $107,000.

Suppose You Want to Buy a Tesla Model S, an All-Electric