Question

In order for an andre to reach his saving goal how much will andrew need to save each month

Answer 1

Write out formula

Where

PMT= Monthly payment

P= Principal

APR= Annual payment rate

n = number of times compounded in a year

`\begin{gathered} P=36,950 \\ \text{APR}=2.5\text{ \%=0.025} \\ n=12 \\ y=5 \end{gathered}`

Substitute the values into the formula

`\text{PMT}=(36950*(0.025)/(12))/((1-(1+(0.025)/(12))^(-5(12)))`

Simplifying the expression above

`\begin{gathered} \text{PMT}=(76.979)/(1-(1.0021)^(-60)) \\ \\ \text{PMT}=(76.979)/(1-0.8826)=(76.979)/(0.1174)=655.70 \end{gathered}`

Hence

`\text{PMT}=655.70`

Therefore,

Andre will need to save 655.70monthly to reach his goal