A new six-speed automatic transmission for automobiles, Ask an Expert

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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. If a four speed transmission car averages 30 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 120,000 miles over its lifetime of 10 years. The motorist can earn 6% per year on investment.

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Category:- Basic Finance
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