Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Please explain, I tried multiple tmes, but couldn't get to the right answer. I have udated the with table, please help. Thanks. Stan Moneymaker has
Please explain, I tried multiple tmes, but couldn't get to the right answer.
I have udated the with table, please help. Thanks.
Stan Moneymaker has been informed of a major automobile manufacturer's plan to conserve on gasoline consumption through improved engine design. The idea is called "engine displacement, " and it works by switching from 8-cylinder operation to 4-cylinder operation at approximately 40 miles per hour. Engine displacement allows enough power to accelerate from a standstill and to climb hills while also permitting the automobile to cruise at speeds over 40 miles per hour with little loss in driving performance. The trade literature studied by Stan makes the claim that the engine displacement option will cost the customer an extra $1, 400 on the automobile's sticker price. This option is expected to save 4 miles per gallon (an average of in-town and highway driving). A regular 8-cylinder engine in the car that Stan is interested In buying gets an average of 24 miles per gallon of gasoline. If Stan drives approximately 1, 680 miles per month, how many months of ownership will be required to make this $1, 400 investment pay for Itself? Stan's opportunity cost of capital (i) is 0.5% per month, and gasoline costs $3.25 per gallon. Using the table given above and the interpolation method, months of ownership will be required to make this $1, 400 investment pay for itself. (Round to one decimal place.)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started