Answer:
The formula for the present value of an annuity payment, that is,
if you make n payments at interest rate i what will be the value of the
annuity after n payments. The formula assumes a monthly payment of 1.
A = (1 - (1 + i)^-n) / i or what will the 1 payment be worth after n periods.
i = .05 / 12 the monthly interest rate
n = 360 the number of monthly payments
A = (1 - (1 + (.05/12))^-360) / (.05 / 12) = 186.28
Since each monthly payment of $1 = 186.28 after 30 years
what must be the monthly payment to have $130,000 in 30 years?
Payment = 130,000 / 186.28 = 697.87