SOLUTION: Raj placed $6000 in saving account. For how long can $600 be withdraw from the account at the end of every month starting one month from now if interest is 4.58% compounded monthly
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Question 1141908: Raj placed $6000 in saving account. For how long can $600 be withdraw from the account at the end of every month starting one month from now if interest is 4.58% compounded monthly? Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! the investment is 6000 and 600 is withdrawn at the end of each month.
the interest rate is 4.58% per year compounded monthly.
that makes the interest rate equal to 4.58 / 12 = .3816666666...% per month.
using the TI-BA-II business analyst calculator from texas instruments, i do the following:
PV = -6000
FV = 0
PMT = 600
I/Y = 4.58 / 12 = .381666667
payments are made at the end of each month.
i then have the calculator give me the value of N.
the calculator tells me that N = 10.21527705
for this problem:
PV means present value
FV means future value
PMT means payment in each time period.
I/Y means interest rate percent in each time period.
N means number of time periods.
the 6000 is completely withdrawn in 10.21527705.
that means 10 months of 600 dollars drawn at the end of each month, with a smaller amount withdrawn in the 11th month.
