Motorist pay for fuel-efficient six speed transmission

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New six speed automatic transmission for automobiles offers an estimated 4% improvement in fuel economy compared to the traditional four-speed transmissions in front wheel drive cars. If a four-speed transmission car averages 30 miles per gallon and gasoline costs three dollars per gallon, how much extra can a motorist pay for fuel-efficient six speed transmission? Assume that the car will be driven for 120,000 miles over its lifetime of 10 years. The motorist can earn 6.69 % per year on an investment. Instructor hint: to get the correct answer you ust assume the person buys his gasoline at the end of each year.

Reference no: EM13894124

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