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 ?

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.