A concept car that will get 100 miles per gallon and carry 4 persons would have a carbon-fiber and aluminum composite frame with a 900 cc three- cylinder turbodiesel/electric hybrid power plant. The extra cost of these technologies is estimated to be $11,000. If gasoline savings over a comparable conventional car would be $900 in year 1, increas- ing by 10% each year, what is the present worth of the savings over a 10-year period at an interest rate of 8% per year?

A concept car that will get 100 miles per gallon and carry 4 persons would have a carbon-fiber and aluminum composite frame with a 900 cc three- cylinder turbodiesel/electric hybrid power plant. The extra cost of these technologies is estimated to be $11,000. If gasoline savings over a comparable conventional car would be $900 in year 1, increas- ing by 10% each year, what is the present worth of the savings over a 10-year period at an interest rate of 8% per year?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2.38 A concept car that will get 100 miles per gallon
and carry 4 persons would have a carbon-fiber and
aluminum composite frame with a 900 cc three-
cylinder turbodiesel/electric hybrid power plant.
The extra cost of these technologies is estimated to
be $11,000. If gasoline savings over a comparable
conventional car would be $900 in year 1, increas-
ing by 10% each year, what is the present worth of
the savings over a 10-year period at an interest rate
of 8% per year?

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