Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 7

High-profile vehicles have poor fuel efficiency because of increased wind resistance from their large front area. A number of companies make devices that they claim will significantly increase a vehicle's fuel efficiency. One company claims that by spending $560 on its friction-reducing device, the fuel efficiency of a pickup truck will increase by 25%. Assuming the device works as claimed, for a vehicle that currently gets 20 miles per gallon (mpg), how many miles would the owner have to drive each year to break even in 5 years Assume the cost of gasoline is $3.50 per gallon and the interest rate is 10% per year.