Question

Melinda is planning for retirement so she makes monthly deposits of $420 in an account earning 5% compounded monthly for 30 years.

(a) Find the amount that Melinda has in the account in 30 years.
$?

(b) Once she retires she will make monthly withdraws on the account for 20 years. Assuming that once she starts withdrawing on the account, she will earn 4% compounded monthly. Find the amount that she can withdraw every month.
$?

Answer 1

a) 5/100 x 420 = 21
21 x 12 x 3= 756
420 x 12 x 3 = 15,120
15,120+756= 15,876

b) 4/100 x 420= $16.8