The Ford Motor Company has redesigned its best selling truck by substituting aluminum for steel in many key body parts. This saves 700 pounds of weight and decreases gas consumption. The fuel consumption will be 24 miles per gallon (mpg), up from 19 mpg of the previous year's model. Ford will increase the sticker price of the redesigned vehicle by $400. Assume this vehicle will be driven 15,000 miles per year and its life will be 10 years. The owner's MARR is 8% per year and gasoline costs $3.50 per gallon. What is the present worth of the incremental capital outlay for the lighter truck?
The Ford Motor Company has redesigned its best selling truck by substituting aluminum for steel in many key body parts. This saves 700 pounds of weight and decreases gas consumption. The fuel consumption will be 24 miles per gallon (mpg), up from 19 mpg of the previous year's model. Ford will increase the sticker price of the redesigned vehicle by $400. Assume this vehicle will be driven 15,000 miles per year and its life will be 10 years. The owner's MARR is 8% per year and gasoline costs $3.50 per gallon. What is the present worth of the incremental capital outlay for the lighter truck?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The Ford Motor Company has redesigned its best selling truck by substituting aluminum for steel in many key body parts. This saves 700 pounds of weight and decreases gas consumption. The fuel consumption will be 24 miles per gallon (mpg), up from 19 mpg of the previous year's model. Ford will increase the sticker price of the redesigned vehicle by $400. Assume this vehicle will be driven 15,000 miles per year and its life will be 10 years. The owner's MARR is 8% per year and gasoline costs $3.50 per gallon. What is the present worth of the incremental capital outlay for the lighter truck? (5.3)
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