Your grandparents put $10,100 into an account so that you would have spending money in college....

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Question

Your grandparents put $10,100 into an account so that you would have spending money in college....

Your grandparents put $10,100 into an account so that you would have spending money in college. You put the money into an account that will earn 4.17 percent compounded monthly. If you expect that you will be in college for 5 years, how much can you withdraw each month?

A.$196.12

B.$186.78

C. $180.56

D. $189.96

E. $186.14

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Answer 1

Answer #1

Information provided:

Present value= $10,100

Time= 5 years*12= 60 months

Interest rate= 4.17%/12= 0.3475% per month

The amount of monthly withdrawal is calculated by entering the below in a financial calculator:

PV= -10,100

N= 60

I/Y= 0.3475

Press the CPT key and PMT to compute the amount of monthly withdrawal.

The value obtained is 186.7827.

Therefore, the amount of monthly withdrawal is $186.78.

Hence, the answer is option b.

In case of any query, kindly comment on the solution.

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Answer 2

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