posted by Thanh on .
Please help me to solve it, today is mydue day !
Suppose an individual makes an initial investment of $2400 in an account that earns 8%, compounded monthly, and makes additional contributions of $100 at the end of each month for a period of 12 years. After these 12 years, this individual wants to make withdrawals at the end of each month for the next 5 years (so that the account balance will be reduced to $0)
How much is in the account after the last deposit is made?
i used this Formula but wrong ?
You are "moving" a single payment plus an annuity up on the time graph for 144 periods
i = .08/12 = .00666667
Amount at the end of 12 years
= 2400(1.00666667)^144 + 100(1.00666667^144 - 1)/.00666667
= 6248.134 + 24050.841
If you want the monthly withdrawals for the next 5 years, let that withdrawal be x
30298.975 = x( 1 - 1.0066667^-60)/.0066667
x = 614.35
tks so much