Question

Say your grandmother gave you $500 right before your college days started. You are thinking you would like to go for an evening out at local establishments once each month (at the end of the month) for the next 45 months. If you can earn one-quarter percent per month, what uniform amount can you spend each month?

Answer 1

To calculate the uniform amount you can spend each month over the next 45 months with a 0.25% interest rate, you can use the formula: Uniform Amount = Amount / (1 + Interest Rate)^Number of Months. With $500 and a monthly interest rate of 0.0025, the uniform amount is approximately $10.61.

Step-by-step explanation:

In order to calculate the uniform amount you can spend each month, we need to find the amount that can be evenly distributed over the next 45 months. Since you can earn one-quarter percent per month, the uniform amount will need to be adjusted for the interest earned.

To find the uniform amount, we can use the formula:

Uniform Amount = Amount / (1 + Interest Rate)Number of Months

Given that you have $500 and the interest rate is 0.25%, the formula becomes:

Uniform Amount = $500 / (1 + 0.0025)45

Using a calculator, we can find that the uniform amount you can spend each month is approximately $10.61.