Linda Baer has already saved $6 comma 898 to buy a used vehicle. Ignoring taxes

Question

Linda Baer has already saved $6 comma 898 to buy a used vehicle. Ignoring taxes and assuming her money is invested in a money market account earning 3 percent compounded annually, how long will it take to buy a car that costs $9 comma 000 ? Click on the table icon to view the FVIF table LOADING... . Ignoring taxes and assuming her money is invested in a money market account earning 3 % compounded annually, to save the money to buy a car that costs $9 comma 000 will take nothing years. (Round to the nearest integer.)

Explanation / Answer

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

9000=6898*(1.03)^n

(9000/6898)=(1.03)^n

Taking log on both sides;

log(9000/6898)=n*log 1.03

n=log(9000/6898)/log 1.03

which is equal to

=9 years(Approx).

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