Six-speed automatic transmission for automobiles offers

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A new six-speed automatic transmission for automobiles offers an estimated 3% improvement in fuel economy compared to traditional four speed transmissions in front-wheel drive cars. If a four-speed transmission car averages 31 miles per gallon and gasoline costs $3.25 per gallon, how much extra can a motorist pay for a fuel-efficient six-speed transmission? Assume that the car will be driven for 129,000 miles over its lifetime of 8 years. The motorist can earn 5% per year on investments. Assume miles driven each year are roughly constant. Click the icon to view the interest and annuity table for discrete compounding when the MARK is 5% per year. The motorist can pay for a fuel-efficient six-speed transmission extra $ (Round to the nearest dollar.)

Reference no: EM131044654

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