You are considering two cars that you plan on keeping for 5 years. One has an EPA combined city and highway rating of 33 mpg. The second has an EPA rating of 36 mpg. Suppose gasoline costs $3.41 per gallon and you drive 10,000 miles each year.

(a) How much (in dollars) will you save in 1 year by purchasing the 36 mpg car? (Enter a number. Round your answer to the nearest cent.)

(b) If you deposit that amount at the end of each year for the 5 years of ownership into an account that earns 4.1% compounded annually, how much (in dollars) will you save over 5 years? (Enter a number. Round your answer to the nearest cent.)

Question

Mathematics

Devin

28 January, 23:13

You are considering two cars that you plan on keeping for 5 years. One has an EPA combined city and highway rating of 33 mpg. The second has an EPA rating of 36 mpg. Suppose gasoline costs $3.41 per gallon and you drive 10,000 miles each year.

(a) How much (in dollars) will you save in 1 year by purchasing the 36 mpg car? (Enter a number. Round your answer to the nearest cent.)

(b) If you deposit that amount at the end of each year for the 5 years of ownership into an account that earns 4.1% compounded annually, how much (in dollars) will you save over 5 years? (Enter a number. Round your answer to the nearest cent.)

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Answers (1)

Know the Answer?

Monserrat · Answer 1

a) $86.11

b) $467.33

Step-by-step explanation:

no. of gallons saved 'n' per year

n = (10000/33) - (10000/36)

n = 2500/99

Amount saved = 3.41*n = 3.41*2500/99

= $86.11

b) over 5 years:

86.11 (1 + (1.041) + (1.041) ² + (1.041) ³ + (1.041) ⁴)

= 86.11 (5.427157431)

= $467.33