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ı want to solve this question by excel formulas?

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matlab coder
matlab coder on 9 May 2022
Closed: Rena Berman on 24 May 2022
This question was flagged by Steven Lord
You initially put $5,000 into the bank at 4% annual interest rate. Each year you put in an additional $2000. After 20 years of doing this, you start taking out bank disbursements (basically payments *from* the bank) to pay for college. If you will take out 4 equally spaced disbursements to pay for 4 years of college and the final value of the college loan will be 0 after taking those 4 disbursements, what will be the value of each of those 4 disbursements?
  7 Comments
Torsten
Torsten on 11 May 2022
Sorry - I only read the title " I want to solve this question by Excel formulas ".

Answers (1)

Torsten
Torsten on 10 May 2022
Edited: Torsten on 10 May 2022
Without guarantee:
disbursement = (5000*1.04^23 + 2000*1.04^4*(1.04^19-1)/0.04)/((1.04^4-1)/0.04)
thus approximately 18150 $.
  3 Comments
Sam Chak
Sam Chak on 10 May 2022
I think @Torsten is correct. (+1)
The compound interest after 20 years is $65,876.70. Then
Year 21: $65876.70*1.04 - x
Year 22: ($65876.70*1.04 - x)*1.04 - x
Year 23: (($65876.70*1.04 - x)*1.04 - x)*1.04 - x
Year 24: ((($65876.70*1.04 - x)*1.04 - x)*1.04 - x)*1.04 - x ... the 4th disbursement empties the account
format longg
f = @(x) (((65876.70*1.04 - x)*1.04 - x)*1.04 - x)*1.04 - x;
dbm = fsolve(f, 20000)
dbm = 18148.37506946083

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