A university has a “sabbatical plan” for its faculty whereby six years are on campus, and the next year is off campus. Salary in the sabbatical year is not fully covered, however. A professor...

A university has a “sabbatical plan” for its faculty whereby six years are on campus, and the next year is off campus. Salary in the sabbatical year is not fully covered, however. A professor estimates she will have to spend a total of $15,000 of her own money in equal monthly withdrawals of $1,250 in the sabbatical year. She will continue to use her current bank during the off year.The bank pays 5% interest, compounded continuously.

If she makes uniform monthly deposits to her bank over the six-year period, what amount must she deposit each month to cover her sabbatical year expenditure? Draw the cash flow diagram from the professor’s viewpoint.