anet's parents want her to go to the same college that they did. They decided to pay a lump sum payment today of $135000 so she will be able to make 4 years of monthly withdrawals. The college provide an annuity of 6%, compounded monthly. If Janet will make her first withdrawal in 8 years, what is the size of each withdrawal?

College Algebra
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ISBN:9781938168383
Author:Jay Abramson
Publisher:Jay Abramson
Chapter9: Sequences, Probability And Counting Theory
Section9.4: Series And Their Notations
Problem 56SE: To get the best loan rates available, the Riches want to save enough money to place 20% down on a...
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Janet's parents want her to go to the same college that they did. They decided to pay a lump sum payment today of $135000 so she will be able to make 4 years of monthly withdrawals. The college provide an annuity of 6%, compounded monthly. If Janet will make her first withdrawal in 8 years, what is the size of each withdrawal?

the answer is NOT $5117.60 or $5134.38 I've asked this question twice and I keep getting the wrong answer does anyone know what they're doing?? this is the third time I'm asking this question.

Expert Solution
Step 1

The principle amount is 135000 and the annuity is 6% compounded monthly so the total number of payments per year are 12 payments at an interest rate of 612=0.5 percent.

The first withdrawal is in 8 years so the money will be compounded till that time.

The money in the bank after 8 years can be calculated by the total number of payments 12×8=96 so the final amount is given by:

A=P1+R100n

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