Question

Your fixed expenses are $1,763.25/month. You saved 6 months' worth for an emergency fund in a savings account earning a 4.5% APR over 3 years. After 3 years, you withdrew $4,360.00 because of losing your job. What is your balance after the withdrawal?

Answer 1

$1,763.25 X 6 = $10,579.50

$10,579.50 X 1.045^3 = $12,072.97

$12,072.97 - $4,360.00 = $7,712.97

The balance after the withdrawal is $7,712.97

Answer 2

The balance in the account after the withdrawal = $7712.97

Explanation:

Amount of fixed expenses in one month = $1763.25

Time interval of fixed expenses = 6 months

Total amount of fixed expenses for 6 months = 1763.25 × 6

= $10579.50

Interest Rate = 4.5%

= 0.045

Time = 3 years

Total amount in account after 3 years = 10579.50 × ( 1 + 0.045)³

= $12072.97

Amount withdrawn from the account = $4360

So, amount that is left in the account = 12072.97 - 4360

= $7712.97

Hence, The balance in the account after the withdrawal = $7712.97