2

1. General Motors is selling Chevrolet Malibu, a car with a dangerous fuel tank placement that was implicated in a number of fiery crashes. As engineers you are asked to make a decision on whether the company should fix the known fuel-tank problem, based on the following data: - Company's yearly production is 3297 cars, the present worth of a rough estimation for changing the position of the tanks of all cars for a 5 years production is 1 million USD. - On the other hand, leaving the car as it was would cost General Motors some other value per car, based on settling the product liability lawsuits, with an average expected payout of $20,000 per year. MARR=10%. 1. Estimate the respective yearly costs per car of each decision. (15 points) 2. Choose using the best alternative using a simple economic approach. Explain why? (15 points)