Question

Because unintended lane changes by distracted drivers are responsible for 43% of all highway fatalities, Ford Motor Co. and Volvo launched a program to develop technologies to prevent accidents by sleepy drivers. A device costing $260 tracks lane markings and sounds an alert during lane changes. If these devices are included in 100,000 new cars per year beginning 3 years from now, what would be the present worth of their cost over a 10-year period at an interest rate of 10% per year?

Answer 1

Each device cost $260 and there are 100,000 new cars which need to be fitted with these devices.

therefore, Prinicipal= 100,000*260

Using the formula (P/A,10%,8)(P/F,10%,2)

We get; 26,000,000(5.3349)(0.8264)

= $114.628 million

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