Chrysler Motors redesigned the Dodge Ram by substituting light weight reinforced fibre for steel in many...

 

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Chrysler Motors redesigned the Dodge Ram by substituting light weight reinforced fibre for steel in many of the key body parts of the vehicle. The substitution saved 900 pounds of weight and decreased gasoline consumption considerably. The fuel consumption will be 30 miles per gallon up from the previous 20 miles per gallon on the steel-bodied model. Chrysler increased the purchase price of the redesigned truck by US$600. The new vehicle will be driven 12,000 miles per year and is expected (will proper maintenance) to have a useful life of ten (10) years. The Marginal Attractive Rate of Return (MARR) is 6%, and the price of gasoline is US$4.00 per gallon. What is the present worth of the incremental capital outlay for the lighter-weight vehicle? Chrysler Motors redesigned the Dodge Ram by substituting light weight reinforced fibre for steel in many of the key body parts of the vehicle. The substitution saved 900 pounds of weight and decreased gasoline consumption considerably. The fuel consumption will be 30 miles per gallon up from the previous 20 miles per gallon on the steel-bodied model. Chrysler increased the purchase price of the redesigned truck by US$600. The new vehicle will be driven 12,000 miles per year and is expected (will proper maintenance) to have a useful life of ten (10) years. The Marginal Attractive Rate of Return (MARR) is 6%, and the price of gasoline is US$4.00 per gallon. What is the present worth of the incremental capital outlay for the lighter-weight vehicle?

Answer rating: 100% (QA)

To calculate the present worth of the incremental capital outlay for the lighterweight vehicle we ne... View the full answer