2.[10 points] Catherine deposits $P into a savings account on the first day of each month...

 

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2.[10 points] Catherine deposits $P into a savings account on the first day of each month for the next 35 years (420 investments). Afterwards, she plans to retire and to withdraw a fixed amount of money $W each month for the following 35 years (420 withdrawals). Assume that a bank gives her a monthly interest r = 4%/12. Consider future and present values. (a) (4pts) How much money does she have a month after the last deposit? (b) (5pts) Find W such that her balance becomes zero with the last withdrawal. (c) (1pt) What money would you would like to have in retirement? What money would you would need to put aside each month? Make your own choice of $W (e.g. $3000) and compute $P. 2.[10 points] Catherine deposits $P into a savings account on the first day of each month for the next 35 years (420 investments). Afterwards, she plans to retire and to withdraw a fixed amount of money $W each month for the following 35 years (420 withdrawals). Assume that a bank gives her a monthly interest r = 4%/12. Consider future and present values. (a) (4pts) How much money does she have a month after the last deposit? (b) (5pts) Find W such that her balance becomes zero with the last withdrawal. (c) (1pt) What money would you would like to have in retirement? What money would you would need to put aside each month? Make your own choice of $W (e.g. $3000) and compute $P.

Answer rating: 100% (QA)

a To find how much money Catherine has a month after the last deposit we need to calculate the future value of her 420 deposits We can use the formula ... View the full answer