1.11: Answer A and B questions Sure! Here's the transcription and explanation of the content from the image:---### Use the following formula:\[ A = P \left( \frac{\left(1 + \frac{r}{n}\right)^{nt} - 1}{\frac{r}{n}} \right) \]**Suppose that you drive 50,000 miles per year and gas averages $4 per gallon. Complete parts a. and b. below.**---**a.** What will you save in annual fuel expenses by owning a hybrid car averaging 50 miles per gallon rather than an SUV averaging 25 miles per gallon?$[ \_\_\_\_ ](Round to the nearest dollar as needed.)---**b.** If you deposit your monthly fuel savings at the end of each month into an annuity that pays 4.8% compounded monthly, how much will you have saved at the end of seven years?$[ \_\_\_\_ ](Round to the nearest dollar as needed.)---### Explanation:The formula provided is the future value of an ordinary annuity, where:- $ A $ is the future value of the annuity.- $ P $ is the periodic payment (monthly savings in this context).- $ r $ is the annual interest rate (4.8% in this case).- $ n $ is the number of compounding periods per year (12 for monthly).- $ t $ is the number of years the money is invested (7 years here).In part a, you calculate the difference in annual fuel costs between a hybrid car and an SUV. In part b, you invest the savings monthly into an annuity to find the future value after seven years.

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Use the following formula. nt P 1+ 47* A = C Suppose that you drive 50,000 miles per year and gas averages $4 per gallon. Complete parts a. and b. below. a. What will you save in annual fuel expenses by owning a hybrid car averaging 50 miles per gallon rather than an SUV averaging 25 miles per gallon? $ (Round to the nearest dollar as needed.) ………. b. If you deposit your monthly fuel savings at the end of each month into an annuity that pays 4.8% compounded monthly, how much will have saved at the end of seven years? $ (Round to the nearest dollar as needed.)

Use the following formula. nt P 1+ 47* A = C Suppose that you drive 50,000 miles per year and gas averages $4 per gallon. Complete parts a. and b. below. a. What will you save in annual fuel expenses by owning a hybrid car averaging 50 miles per gallon rather than an SUV averaging 25 miles per gallon? $ (Round to the nearest dollar as needed.) ………. b. If you deposit your monthly fuel savings at the end of each month into an annuity that pays 4.8% compounded monthly, how much will have saved at the end of seven years? $ (Round to the nearest dollar as needed.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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