Question

Grandma decides to put 1200 dollars every month into an account for you. She makes 16 monthly deposits, the last coming September 1, 2019 - the day you start college. She wants you to be able to withdraw money from this account at the beginning of each month, with the first withdrawal coming September 1, 2019 and the last coming June 1, 2024, (when you'll graduate). (Note: that makes 58 withdrawals total.) How much will you be able to withdraw each month if the account is earning a nominal interest rate of 7.5 percent convertible monthly?

Answer 1

Statement of Deposits of Grandma
Instl.	Opening	Deposits	Total	Interest	Closing
1	-	1,200	1,200	90	1,290
2	1,290	1,200	2,490	187	2,677
3	2,677	1,200	3,877	291	4,168
4	4,168	1,200	5,368	403	5,770
5	5,770	1,200	6,970	523	7,493
6	7,493	1,200	8,693	652	9,345
7	9,345	1,200	10,545	791	11,336
8	11,336	1,200	12,536	940	13,476
9	13,476	1,200	14,676	1,101	15,777
10	15,777	1,200	16,977	1,273	18,250
11	18,250	1,200	19,450	1,459	20,908
12	20,908	1,200	22,108	1,658	23,767
13	23,767	1,200	24,967	1,872	26,839
14	26,839	1,200	28,039	2,103	30,142
15	30,142	1,200	31,342	2,351	33,693
16	33,693	1,200	34,893	2,617	37,510
				Total Amount Available	37,510
				Total Number of withdrawals	58
				Monthly withdrawal	647