In parts a–k below, write the equations that result when you follow the steps to use the systematic withdrawal formulato determine how long it will take for a savings account to reach $0. The account was set up with an initial deposit of $3000. Interest is compounded semi-annually at 1.3% with a semi-annual withdrawal of $300.
a. Substitute P = 3000, W = 300, r = 0.013, and n = 2 in the systematic withdrawal formula.
b. Simplify the fractions and the value in parentheses.
c. Divide both sides by 300.
d. Multiply both sides by 0.0065.
e. Subtract 1 from both sides.
f. Divide both sides by –1.
g. Take the log of both sides (One-to-One Property).
h. Apply the Power Property.
i. Divide both sides by log(1.0065).
j. Divide both sides by –2.
k. Simplify.

Transcribed Image Text:

1 P=W- 1 + r n r n -nt