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Answer :
To determine the amount of money the elderly lady needs to deposit in the trust fund, we need to use the concept of "compounded interest" and consider her monthly withdrawal of $4500.
The bank pays 0.6% interest compounded monthly, which means the interest rate per month is 0.6%/12 = 0.05%.
Let's denote the initial deposit as "P" and the interest rate per month as "r". Since the fund is supposed to last forever, the interest earned each month should be equal to the amount she withdraws ($4500).
We can express this as:
Interest = Withdrawal
P * r = $4500
Now, we can plug in the values for r:
P * 0.0005 = $4500
To find the initial deposit "P", we need to isolate it by dividing both sides of the equation by 0.0005:
P = $4500 / 0.0005
P = $9,000,000
So, the elderly lady needs to deposit $9,000,000 in the trust fund to ensure she can withdraw $4500 per month indefinitely.
When she passes away, her niece Susan will receive the balance, which will be the same as the initial deposit, since the interest earned is used for her monthly withdrawals.
Therefore, Susan will receive $9,000,000.
To learn more about “interest rate” refer to the https://brainly.com/question/25720319
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