Yumi's grandparents presented her with a gift of $11,000 when she was 12 years old to be used for her college education. Over the next 5 years, until she turned 17, Yumi's parents had invested her money in a tax-free account that had yielded interest at the rate of 4.5%/year compounded monthly. Upon turning 17, Yumi now plans to withdraw her funds in equal annual installments over the next 4 years, starting at age 18. If the college fund is expected to earn interest at the rate of 8%/year, compounded annually, what will be the size of each installment?

Question

anonymous · Answer

I keep getting 3648.57 but the correct answer is 4157.38 so I'm not sure where I'm messing up

anonymous · Answer

I do 11000(1+.045/12)^(12*5) =13769.75
13769.75(1-(1.08)^-4)=3648.57

dtan5457 · Answer

She yields the 4.5 monthly or yearly?

anonymous · Answer

4.5 yearly compounded monthly