Wow!. Is this a "Challenge Question" or what??.
First, the person or the teacher who posed this question doesn't seem to be familiar with modern TVM formulas!!
There are two questions here:
1) What is the amount of $M that she can withdraw each month and still allow her to save $80,000 as a down payment on her house?.
We know she deposits $4,500 in her savings account that earns 4.5% comp. monthly.
Will have to find the FV of these 72 payments (6 years) using this common formula:
FV=P{[1 + R]^N - 1/ R}=FV OF $1 PER PERIOD.
Plugging all the numbers in and crunching them, we get:
FV=$372,555.59. But we know she wants to keep $80,000 of this for her down payment. So we have:
$372,555.59 - $80,000 =$292,555.59 the balance in savings account that she can spend.
Plugging this into the above TVM formula, we can calculate her monthly withdrawal from her savings account. And this monthly amount comes to:$3,533.70. This is the amount of $M in the question.
2) The balance in her savings account after depositing two payments of $4,500 each and withdrawing of two payments of $3,533.70 each will be:
$9,050.69 - $7,107.20=$1,943.48, using the same above TVM formula!!.
P.S. The two questions posed were answered in reverse, in order to determine the $M of her withrawals. Also, remember that her payments were made at the beginning of the month, which has been taken into account. All that mumbo-jumbo of R^72+R^71+R^70.........are totally unnecessary. And that is the END!!.