Not good at using a financial calculator..The following is my question

Question

Linda Baer has saved 5,000 to buy a prev owned vehicle. Ignorlong taxes and assuming her money is invested in a flexible withdrawal CD earnings 5 percent Compounded annually , how long will it take to buy a car that costs $7,755? (hint: the answer is between 6 and 10 years)

Answer 1

Hello Sofai

 

Linda has $5000 = P

i = 5% = .05

F = future value = $7755

t = # years

Annual Compounding 

 

F = P(1+i)^t

 

Let's plug in the values we know

7755 = (5000)(1+.05)^t

 

Next we need to work through the algebra to isolate the t variable

7755 = 5000(1.05)^t

1.551 = 1.05^t

 

Taking the natural log (ln)

ln(1.551) = t ln(1.05)

 

ln(1.551)

----------  =  t

ln(1.05)

 

0.438

-------  = t

0.0488

 

t = 8.996 ≈ 9 years