A farmer deposits R11 944, for 60 months to buy a tractor.suppose that 12 months afta the purchase of the present tractor and every 12 months thereafter,the farmer withdraws R5000 from his account to pay for maintanance of the tractor.If he makes such withdrawls,what will the new monthly deposit be?
To find the new monthly deposit, we need to subtract the withdrawals from the initial deposit and adjust for the remaining time period. Let's break down the steps:
1. Calculate the total amount withdrawn over 5 years (60 months):
Total withdrawals = (Number of withdrawals per year) x (Amount withdrawn per time) x (Number of years)
Total withdrawals = (60 months / 12 months per year) x R5000 = R25,000
2. Subtract the total withdrawals from the initial deposit to find the remaining balance:
Remaining balance = Initial deposit - Total withdrawals
Remaining balance = R11,944 - R25,000 = -R13,056 (Negative balance)
3. Adjust the remaining balance by dividing it over the remaining time period (55 months):
New monthly deposit = Remaining balance / Remaining months
New monthly deposit = -R13,056 / 55 months ≈ -R237.38 (rounded to two decimal places)
Therefore, the new monthly deposit would be approximately -R237.38. It is important to note that the negative value indicates that the farmer would need to deposit an additional amount each month to cover the withdrawals made.