Answer:
Explanation:
Find the table attached below:
a) According to the table, total average cost = $0.96/mile
If 20,000miles was driven in a year, the total annual expense for the car will be:
20,000×0.96 = $19,200
b) In order to know how much will be saved for 5 years at IRA of 8.2% compounded annually, we will use the formula
A = [P(1+r/n)^nt - 1]/r/n
P = $19200
r = 8.2%
n = 1 (annual compounding)
t = 5
Substitute
A = [19200((1+0.082/1)^1(5)- 1)/0.082
A = [19200{(1.082)^5 - 1}]/0.082
A = 19200(1.4829-1)/0.082
A = 19200(0.4829)/0.082
A = 9273.28/0.082
A = 113,088.8
Hence the amount after 5 years compounded annually is $113,088.8
