Automobiles of the future will most likely be manufactured


Automobiles of the future will most likely be manufactured largely with carbon fibers made from recycled plastics, wood pulp, and cellulose. Replacing half the ferrous metals in current automobiles could reduce a vehicle's weight by 55% and fuel consumption by 25%. One impediment to using carbon fibers in cars is cost. If the justification for the extra sticker price of carbon-fiber cars is solely based on fuel savings, how much extra sticker price can be justified over a six-year life span if the carbon-fiber car would average 35 miles per gallon of gasoline compared to a conventional car averaging 28 miles per gallon? Assume that gasoline costs $3.50 per gallon, the interest rate is 23% per year, and 118,000 miles are driven uniformly over six years.

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Financial Management: Automobiles of the future will most likely be manufactured
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