A concept car that will get 100 miles per gallon and carry four persons would have a carbon-fiber and aluminum composite frame with a 900 cc three-cylinder turbodiesel/electric hybrid power plant. The extra cost of these technologies is estimated to be $11,000. 

(a) If gasoline savings over a comparable conventional car would be $900 in year one, increasing by 10% each year, what is the present worth of the savings over a 10-year period at an interest rate of 8% per year? 

(b) Compare the present worth values to determine if the extra cost is recovered by fuel savings.

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a To calculate the present worth of the savings we need to find the present value of each years savi... View the full answer