Question

A new​ six-speed automatic transmission for automobiles offers an estimated 3​% improvement in fuel economy compared to traditional four speed transmissions in​ front-wheel drive cars. If a​ four-speed transmission car averages 33miles per gallon and gasoline costs ​$3.25per​ gallon, how much extra can a motorist pay for a​fuel-efficient six-speed​ transmission? Assume that the car will be driven for 115,000 miles over its lifetime of 12 years. The motorist can earn 6​% per year on investments. Assume miles driven each year are roughly constant.

Answer 1