Business, 26.11.2019 21:31 samstuart10p3g96w

Dupont claims that its synthetic composites will replace metals in the construction of future automobiles. "the fuel mileage will double," says dupont. suppose the light and stronger "composite automobile" will get 50 miles per gallon of gasoline, and the gasoline costs $3.70 per gallon. the anticipated life of the automobile is seven years, i equals 15 % per year, and annual travel is 15 comma 000 miles. the conventional car averages 25 miles per gallon. assume fuel expense is the only expense to be considered.

a. how much more expensive can the sticker price of the composite automobile be and still have it as an economical investment for a prospective auto buyer?
b. what is the tradeoff being made in part (a)?

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