A famous athlete went bankrupt by spending his $30 million fortune in 15 years.Given that his investments were earning him 7.45% compounded monthly, determine his annual spending that allowed him to be penniless in 15 years.

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we can determine the amount of money the athlete would have had after 15 years:

$30,000,000 * (1 + 0.0745/12)^(12*15) = $89,417,831.46

This means that his annual spending was:

$89,417,831.46 / 15 = $5,961,188.77

Subtracting this from his original fortune, we get:

$30,000,000 - ($5,961,188.77 * 15) = $3,443,012.95

Since this value is closest to option B, the correct answer is B.

A Famous Athlete Went Bankrupt by Spending His $30 Million