The formula to calculate the savings distribution (SD) is:
\[ SD = \frac{P}{\left(\frac{1 - (1 + r)^{-n}}{r}\right)} \]
Where:
Let's say the total savings amount (\( P \)) is $10,000, the monthly interest rate (\( r \)) is 0.005, and the total number of months (\( n \)) is 24. Using the formula:
\[ SD = \frac{10,000}{\left(\frac{1 - (1 + 0.005)^{-24}}{0.005}\right)} \]
We get:
\[ SD = \frac{10,000}{\left(\frac{1 - (1.005)^{-24}}{0.005}\right)} \]
\[ SD = \frac{10,000}{\left(\frac{1 - 0.8869}{0.005}\right)} \]
\[ SD = \frac{10,000}{\left(\frac{0.1131}{0.005}\right)} \]
\[ SD = \frac{10,000}{22.62} \approx $443.21 \]
So, the savings distribution (\( SD \)) is approximately $443.21 per month.
A savings distribution refers to the process of withdrawing funds from a savings account or other type of savings vehicle, such as a retirement or investment account. This can occur when the account holder needs to use the saved money for expenses or investments. The distribution may be subject to taxes or penalties, depending on the type of account and the account holder's age or financial situation.
