Extra Education: You graduated with your undergraduate degree in engineering and

Question

Extra Education: You graduated with your undergraduate degree in engineering and have been working in an excellent position for the past few years. Due to your knowledge of engineering fundamentals-including engineering economics, decision analysis, and optimization-you have risen relatively rapidly within the organization. You are considering getting an MBA, part-time in the evenings, while you work for the firm during the day. There are twenty courses in the MBA curriculum, and you can take eight courses per year-two courses per quarter, including the summer-and thus earn your MBA in only 2.5 years while working full time and earning your normal salary. Your firm has an attractive tuition reimbursement policy. Each course costs dollar 3,500 and you will take two courses each quarter. Your firm will give you an advance for these two courses at the beginning of the quarter. That is, you will receive a check for dollar 7,000 at the beginning of the quarter. The tuition is due one month into the quarter, when you pay the university dollar 7,000 for the two courses that you are taking that quarter. Assume that you can establish a special bank account to only handle the cash flows that are related to your MBA. That is, you deposit the advance into the account at the beginning of the quarter, and you pay the tuition exactly one month later. This account earns 7%/year, compounded monthly, on the money that is in this account. You get your first advance at the beginning of Month 1. At the end of your degree (after 30 months, i.e., at the beginning of month 31), how much money will be in this account? dollar square (round your answer to the nearest dollar, do not input a dollar sign)

Explanation / Answer

Solution :interest amounth for the first month is calculated on amount deposited*7%/12
and interest amount for 2nd, 3rd month is calculated on (Balance + deposited - withdrawn)*7% / 12
and interest for the 4 th month is calculated as  {(Balance + deposited - withdrawn)*7% / 12} + {amount deposited*7%/12}

refer table below apply above concept and the balance in account at the beginning of month 31 will be $846.5

Amount Deposited Amount Withdrawn Interest @7% Compunded Monthly Balance Month 1 7000.0 0.0 40.833 7040.8 Month 2 0.0 7000.0 0.238 41.1 Month 3 0.0 0.0 0.240 41.3 Month 4 7000.0 0.0 81.908 7123.2 Month 5 0.0 7000.0 0.719 123.9 Month 6 0.0 0.0 0.723 124.7 Month 7 7000.0 0.0 82.394 7207.1 Month 8 0.0 7000.0 1.208 208.3 Month 9 0.0 0.0 1.215 209.5 Month 10 7000.0 0.0 82.889 7292.4 Month 11 0.0 7000.0 1.705 294.1 Month 12 0.0 0.0 1.715 295.8 Month 13 7000.0 0.0 83.392 7379.2 Month 14 0.0 7000.0 2.212 381.4 Month 15 0.0 0.0 2.225 383.6 Month 16 7000.0 0.0 83.904 7467.5 Month 17 0.0 7000.0 2.727 470.2 Month 18 0.0 0.0 2.743 473.0 Month 19 7000.0 0.0 84.426 7557.4 Month 20 0.0 7000.0 3.252 560.7 Month 21 0.0 0.0 3.271 563.9 Month 22 7000.0 0.0 84.956 7648.9 Month 23 0.0 7000.0 3.785 652.7 Month 24 0.0 0.0 3.807 656.5 Month 25 7000.0 0.0 85.496 7742.0 Month 26 0.0 7000.0 4.328 746.3 Month 27 0.0 0.0 4.353 750.7 Month 28 7000.0 0.0 86.046 7836.7 Month 29 0.0 7000.0 4.881 841.6 Month 30 0.0 0.0 4.909 846.5

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