Suppose you want to buy a Tesla Model S, the world's leading 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 2010 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? O $107,000 O $87.500 O $57,000 O $68,000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Suppose you want to buy a Tesla Model S, the world's leading 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 2010 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?
O $107,000
O $87.500
O $57,000
O $68,000
Transcribed Image Text:Suppose you want to buy a Tesla Model S, the world's leading 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 2010 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? O $107,000 O $87.500 O $57,000 O $68,000
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