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Linda Baer has already saved ​$3 comma 978 to buy a used vehicle. Ignoring taxes and assuming her money is invested in a money market account earning 6 percent compounded​ annually, how long will it take to buy a car that costs ​$7 comma 124​?

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Answer:

Given the currents conditions, it will take 10 years to reach the amount required.

Explanation:

Giving the following information:

Linda Baer has already saved ​$3,978 to buy a used vehicle.

The account earns 6 percent compounded​ annually.

Final value= ​$7,124

To calculate the amount of time required we need to use the following formula:

n=[ln(FV/PV)]/ln(1+r)

n= [ln(7,124/3,978)]/ln(1+0.06)

n= 0.253/0.0253

n= 10

Given the currents conditions, it will take 10 years to reach the amount required.

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