Engineering Economy 16th Edition by William Sullivan ,Elin Wicks, Koelling,

Exercise 9

Unless stated otherwise, discrete compounding of interest and end-of-period cash flows should be assumed in all problem exercises for the remainder of the book. All MARRs are "per year." The number in parentheses that follows each problem refers to the section from which the problem is taken.
A new six-speed automatic transmission for automobiles offers an estimated 4% improvement in fuel economy compared to traditional fourspeed 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 for 120,000 miles over its lifetime of 10 years. The motorist can earn 6% per year on investments.