Question

Your grandparents put $11,100 into an account so that you would have spending money in college. You put the money into an account that will earn an APR of 4.37 percent compounded monthly. If you expect that you will be in college for 5 years, how much can you withdraw each month

Answer 1

Monthly withdraw= $206.28

Step-by-step explanation:

Giving the following information:

Initial investment (PV)= $11,100

Interest rate (i)= 0.0437/12= 0.003642

Number of periods (n)= 5*12= 60 months

To calculate the monthly withdrawal, we need to use the following formula:

Monthly withdraw= (PV*i) / [1 - (1+i)^(-n)]

Monthly withdraw= (11,100*0.003642) / [1 - (1.003642^-60)]

Monthly withdraw= $206.28