How much should Mikael put into an account at 9% compounded monthly so he can withdraw $2500 every month for the first 5 years of his retirement?

he should deposit $120475 into the account.

Step-by-step explanation:

We would apply the periodic interest rate formula which is expressed as

P = a/{[(1+r)^n]-1}/[r(1+r)^n]

Where

P represents the amount that he can withdraw each month.

a represents the amount that he should deposit.

r represents the annual rate.

n represents number of monthly withdrawals. Therefore

r = 0.09/12 = 0.0075

n = 12 × 5 = 60

P = 2500

Therefore,

2500 = a/{[(1+0.0075)^60]-1}/[0.0075(1+0.0075)^60]

2500 = a/{1.566 -1}/[0.0075(1.566)]

2500 = a/{0.566}/[0.0075(1.566)]

2500 = a/(0.566/0.011745)

2500 = a/48.19

a = 2500 × 48.19

a = 120475

6

step-by-step explanation: