Linda Baer has already saved $5,475 to buy a used vehicle. Ignoring taxes and assuming her money is invested in a money market account earning 4 percent compounded annually, how long will it take to buy a car that costs $7,792 ?

Question

Business

Lorelai Hunter

8 July, 02:26

Linda Baer has already saved $5,475 to buy a used vehicle. Ignoring taxes and assuming her money is invested in a money market account earning 4 percent compounded annually, how long will it take to buy a car that costs $7,792 ?

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Answers (1)

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Lobster · Answer 1

9.16 years

Explanation:

To find the answer, we arrange the quantities in the following formula:

$5,475 (1 + 0.04) ^x = $7,792

As it can be seen, we are solving for x, which is the period of time that it has taken for the initial $5,475 to become the final $7,792 that are needed for buying the car. Now we simply solve the equation:

(1+0.04) ^x = $7,792 / $5,475

(1.04) ^x = 1.4232

xlog 1.04 = log 1.432

x = log1.432 / log1.04

x = 9.16