Answer: The Monthly payment is $1257.5
Step-by-step explanation:
We would apply the formula for determining future value involving deposits at constant intervals. It is expressed as
S = R[{(1 + r)^n - 1)}/r][1 + r]
Where
S represents the future value of the investment.
R represents the regular payments made(could be weekly, monthly)
r = represents interest rate/number of interval payments.
n represents the total number of payments made.
From the information given,
S = $550000
r = 0.055/12 = 0.00458
n = 12 × 20 = 240
Therefore,
550000 = R[{(1 + 0.00458)^240 - 1)}/0.00458][1 + 0.00458]
550000 = R[{(1.00458)^240 - 1)}/0.00458][1.00458]
550000 = R[{(2.994 - 1)}/0.00458][1.00458]
550000 = R[(1.994)/0.00458][1.00458]
550000 = R[435.371][1.00458]
550000 = 437.365R
R = 550000/437.365
R = 1257.5
