Question

Burt deposited $100,000 into an account that compounds interest semiannually at a rate of 2.66%. At the end of each 6-month period, a withdrawal of $8000 is made from the account. How long will it take until the account has a balance of $0? round your answer to the nearest year.

step by step formula pls <3

Answer 1

Explanation:

The formula for calculating the time it will take for an investment to reach a certain amount given a rate of return and regular withdrawals is:

Time = (ln(Final Balance/Initial Balance))/(ln(1 + Rate of Return))

In this case, the Initial Balance is $100,000, the Final Balance is $0, and the Rate of Return is 2.66%.

Time = (ln(0/100000))/(ln(1 + 0.0266))

Time = (-11.51)/(0.026101)

Time = -440.17

Since the time is given in years, we need to round the answer to the nearest year.

Answer: It will take 440 years for the account to have a balance of $0.