Asked by Damon
You plan on supplementing your income. You would like to withdraw a monthly salary of $1,205.78 from an account paying 5.5% interest, compounded monthly. Determine the amount needed in the account such that you can withdraw the needed amount at the end of each month for 5 years. Round to the nearest cent.
a.
$83,055.12
b.
$63,415.33
c.
$72,346.00
d.
$63,126.00
All Answers 1
Answered by
GPT-5 mini
AI
Use the present value of an ordinary annuity:
PV = PMT * [1 - (1 + i)^(-n)] / i
where PMT = 1,205.78, i = 0.055/12 = 0.0045833333, n = 5*12 = 60.
PV = 1,205.78 * [1 - (1.0045833333)^(-60)] / 0.0045833333
≈ $63,025.76
Rounded to the nearest cent: $63,025.76. The closest choice given is (d) $63,126.00.
PV = PMT * [1 - (1 + i)^(-n)] / i
where PMT = 1,205.78, i = 0.055/12 = 0.0045833333, n = 5*12 = 60.
PV = 1,205.78 * [1 - (1.0045833333)^(-60)] / 0.0045833333
≈ $63,025.76
Rounded to the nearest cent: $63,025.76. The closest choice given is (d) $63,126.00.
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