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1.) Sharon is 45 years old and wants to retire at 65. She wishes to make...

1.) Sharon is 45 years old and wants to retire at 65. She wishes to make monthly deposits in an account paying 9% compounded monthly so when she retires she can withdraw $1000 a month for 20 years. How much should she deposit each month? 2.) David works during the summer to help with expenses at school the following year. He is able to save $250 each week for 12 weeks, and he invests it at an annual rate of 7% that is compounded monthly. When school starts, David will begin to withdraw equal amounts from this account each week. What is the most David can withdraw each week for 34 weeks?

can I get some help please?

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Expert Solution

Formula: The present value of an ordinary annuity (PV)

PV = C× [1-(1+r)^-n]/r

PV = Present value (The cummulative amount available at Present)
C= Periodic cash flow.
r =effective interest rate for the period.
n = number of periods.

PV = 1000× [1-(1+0.75)^-240]/0.75

PV = $111,144.95 (The cummulative amount available at age 65)
C= Periodic cash inflow. $1000
r =effective interest rate for the period. 9%÷12 = 0.75
n = number of periods. 12x20= 240

Formula: The Future Value of an ordinary annuity (FV)

FV= C× {[(1+r)^n]-1}/r

FV = Future value (The cummulative amount available in Future)
C= Periodic cash out flow.
r =effective interest rate for the period.
n = number of periods.

Formula: The Future Value of an ordinary annuity (FV)

$111,144.95= C× {[(1+0.75)^240]-1}/0
75

C= $166.41

FV = $111,144.95 (The cummulative amount needed at age 65)
C= Periodic cash out flow = $166.41
r =effective interest rate for the period. 0.75%
n = number of periods. 240

How much should she deposit each month? = $166.41

jeff jeffy answered 7 months ago
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