Quantcast

A community for students.

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

college101

  • 2 years ago

providing the formula would be helpful. John wishes to set up an account for his grandfather so that he can have some extra money each month. John wants his grandfather to be able to withdraw $140 per month for the next 4 years. How much must John invest today at 8% per year compounded monthly so that his grandfather can withdraw $140 per month for the next 4 years? a) $5,714.67 b) $5,764.67 c) $5,694.67 d) $5,734.67 e) $5,724.67

  • This Question is Closed
  1. wio
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Well, for compounding interest, we have the formula: \[ I = Pr^t \]Where \(I\) is the interest made, \(P\) is the principle (initial amount of money), \(r\) is the interest rate, and \(t\) is the number of times it's compounding. Thought this problem will require a bit more thinking.

  2. wio
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    If you want the new ammount, it's just interest plug principle.\[ P+I = P(1+r)^t \]

  3. mathstudent55
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    |dw:1356827130940:dw|

  4. patdistheman
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    So John is making one investment which will generate 8% per year compounded monthly and his grandfather will start withdrawing $140 immediately upon the investment being made and each month after for the next 4 years?

  5. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Sign Up
Find more explanations on OpenStudy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...

23

  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.