Question

Tony saved enough money to place $125,500 in an investment generating 10% compounded monthly. He wants to collect a monthly income of $1,350, at the beginning of each month, for as long as the money lasts. How many months will Tony have this income coming to him?

A.165.
B.145.
C.192.
D.162.

Answer 1

The answer is 162 months, option (D)

Step-by-step explanation:

Solution

Given that:

Tony saved an amount of money =$125,500

Investment generates a =10% compounded monthly

A monthly income of =$1350

Now, we have to find How many months will Tony have this income coming to him

Thus

The current income value will be equal to = $125,500.

So,

125,500 = 1350 + 1350/1.0077 + 1350/1.0077^2 + 1350/1.0077^3 + ... + 1350/1.0077^n

125,500 = 1350 * 1.0077 / 0.0077 * ( 1 - (1/1.0077)^n )

Therefore n= 162 months