Answer:
Option d - $63,126.00
Step-by-step explanation:
Given : You would like to withdraw a monthly salary of $1,205.78 from an account paying 5.5% interest, compounded monthly.
To find : Determine the amount needed in the account such that you can withdraw the needed amount at the end of each month for 5 years?
Solution :
Applying formula of monthly payment ,
Monthly payment, \(M=\frac{\text{Amount}}{\text{Discount factor}}\)
Discount factor \(D=\frac{1-(1+i)^{-n}}{i}\)
Where, Amount = ?
Monthly payment = $1205.78
Rate r= 5.5%=0.055
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Time = 5 years
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Now, put all the values we get,
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Substitute the value in the formula,
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Therefore, Option d is correct.
The amount needed in the account is $63,126.00
