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DuPont claims that its synthetic composites will replace metals in the construction of future automobiles. The fuel mileage will double, says DuPont. Suppose the light
DuPont claims that its synthetic composites will replace metals in the construction of future automobiles. "The fuel mileage will double," says DuPont. Suppose the light and stronger "composite automobile" will get 50 miles per gallon of gasoline, and the gasoline costs $3.80 per gallon. The anticipated life of the automobile is six years 15% per year, and annual travel is 20,000 miles. The conventional car averages 25 miles per gallon. Assume fuel expense is the only expense to be considered a. How much more expensive can the sticker price of the composite automobile be and still have it as an economical investment for a prospective auto buyer? b. What is the tradeoff being made in Part (a)? Click the icon to view the interest and annuity table for continuous compounding when i 15% per year. a. The price of the composite automobile can be more expensive by the maximum amount of Sand still have it as an economical investment for a prospective auto buyer. (Round to the nearest dollar.)
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