Chapter 8.6, Problem 13E

In Exercises 11-14, use the formula

$A=\frac{P\left[1-{\left(1+\frac{r}{n}\right)}^{-nt}-1\right]}{\left(\frac{r}{n}\right)}.$

Round all computations to the nearest dollar.

The table shows the expense of operating and awning four selected cars, by average costs per mile. Use the appropriate information in the table to solve Exercises 13-16.

AVERAGE ANNUAL COSTS OF OWNING AND OPERATING A CAR
	Average Costs per Mile
Make and Model	Operating	Ownership	Total
Cadillac STS	$0.26	$0.72	$0.98
Mercury Grand Marquis GS	$0.23	$0.42	$0.65
Honda Accord LX	$0.21	$0.34	$0.55
Toyota Corolla CE	$0.15	$0.25	$0.40
Source: Runzheimer International

a. If you drive 20,000 miles per years, what is the total annual expense for a Cadillac STS?

b. If the total annual expense for a Cadillac STS is Deposited at the end of each year into an IRA paying 8.5% compounded yearly, how much will be saved at the end of six years?