Question

Determine the amount needed such that when it comes time for retirement, an individual can make monthly withdraws in the amount of $2,154 for 30 years from an account paying 5.1% compounded monthly. round your answer to the nearest cent.a.$396,721.78b.$398,407.85c.$775,440d.$1,833,962.40 please select the best answer from the choices providedabcd

Answer 1

Lets solve the problem through compound interest formula,

The number of months are 360

The account pay interest rate is  5.1 %compounded monthly.

The amount withdraws each month is $2154

The value of n  is 360.

The value of  is i is 5.1%

So,

$P = A [(1+i)^n]-1/i(1+i)^n\\\\P = 2,154 [(1+(0.051/12))^30*12] - 1 / (0.051/12)(1+(0.051/12))^30*12\\\\P = 396,721.78$

Hence the value of principal is $396721.78

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