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A new six-speed automatic transmission for automobiles offers an estimated 4% improvement in fuel economy compared to traditional four speed transmissions in front-wheel drive cars.
A new six-speed automatic transmission for automobiles offers an estimated 4% improvement in fuel economy compared to traditional four speed transmissions in front-wheel drive cars. If a four-speed transmission car averages 25 miles per gallon and gasoline costs $3.00 per gallon; how much extra can a motorist pay for a fuel-efficient six-speed transmission? Assume that the car will be driven for 123,000 miles over its lifetime of 8 years. The motorist can earn 7% per year on investments. Assume miles driven each year are roughly constant
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