Question

1. Today is September 2, 1988. Ten years ago, you deposited P100.00 per month. You made the deposit continuously for 6 years and then stopped. In September 2, 2002, you established a belts and nuts factory. Starting September 2, 2002, you withdraw P1000.00 a month for advertisements. How many months can you withdraw before the money is exhausted? Interest is 6% compounded monthly. (20 points)

Answer 1

Accumulated money at 2 august 2002 (one month before withdrawl)

=100(F/A,0.5%,12*6)(F/P,0.5%,(12*18)-1)

= 100(F/A,0.5%,72)(F/P,0.5%,215)

= 100 (86.40886)(2.92216)

=25250

Now, withdrawl of 1000 starting 2 september 2002

25250=1000(P/A,0.5%,n)

formula of (P/A,i,n)

putting values in above formula (0.5%=0.005)

solving for n

n=27.06 months or 27.06/12=2.25 years