Motorist pay for fuel-efficient six-speed transmission

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Reference no: EM131065152

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 $4.00 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 investments.

Reference no: EM131065152

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