SOLUTION
Write out formula
Where
PMT= Monthly payment
P= Principal
APR= Annual payment rate
n = number of times compounded in a year
[tex]\begin{gathered} P=36,950 \\ \text{APR}=2.5\text{ \%=0.025} \\ n=12 \\ y=5 \end{gathered}[/tex]
Substitute the values into the formula
[tex]\text{PMT}=\frac{36950\times\frac{0.025}{12}}{(1-(1+\frac{0.025}{12})^{-5(12)}}[/tex]
Simplifying the expression above
[tex]\begin{gathered} \text{PMT}=\frac{76.979}{1-(1.0021)^{-60}} \\ \\ \text{PMT}=\frac{76.979}{1-0.8826}=\frac{76.979}{0.1174}=655.70 \end{gathered}[/tex]
Hence
[tex]\text{PMT}=655.70[/tex]
Therefore,
Andre will need to save 655.70monthly to reach his goal
