An experimental composite engine block for an automobile wil

An experimental composite engine block for an
automobile will trim 20 pounds of weight compared
with a traditional cast iron engine block. It is estimated
that at least $2,500 in life-cycle costs will be saved for
every pound of weight reduction over the engine’s
8-year expected life. Given that the engine’s life is
8 years, what assumptions have been made to arrive
at the $2,500 per pound savings?

Solution

The assumptions which had been made to arrive at the cost savings value can be:

1. Life of vehicle is fixed and given

2. No other depreciation costs are involved

3. Effect of weight reduction on cost is present and calculatable