Explanation Given: Jim Milliken won the amount of $15,000 as a prize. He deposited the amount in the account earning 5.2% interest compounded monthly. He begins the withdrawal of the amount at the end of every month for the period of 1year. It is required to know the amount withdrawn each month. Formula used: A = P ( 1 + i ) n Calculation: The amount of the compound interest after one year is: A = P ( 1 + i ) n A is the amount, P is the principal amount, i is the interest rate per year, and n is the number of years. Here, P = $ 15 , 000 , i = ( 5.2 100 ) . ( 1 12 ) and n = ( 1 ) . ( 12 ) By using above formula: A = P ( 1 + i ) n = $ 15 , 000 ( 1 + 5.2 100 × 1 12 ) 12 = $ 15 , 000 ( 1205.2 1200 ) 12 = $ 15 , 000 ( 1.00433333 ) 12 Further simplified: A = $ 15 , 000 × 1.05325736 = $ 15 , 798.8604 = $ 15 , 798.86 Therefore, the amount of the compound interest after one year is $ 15 , 798

12th Edition

ISBN: 8220106844557

Author: MULLINS

Publisher: PEARSON

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Chapter 5.4, Problem 48E

To determine

To calculate: The amount of each monthly withdrawal of person JM.

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Chapter 5.4, Problem 47E

Chapter 5.4, Problem 49E

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