Answer: each monthly payment is $502.2
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 = $25000
r = 0.02/12 = 0.00167
n = 12 × 2 = 48
Therefore,
25000 = R[{(1 + 0.00167)^48 - 1)}/0.00167][1 + 0.00167]
25000 = R[{(1.00167)^48 - 1)}/0.00167][1.00167]
25000 = R[{(1.083 - 1)}/0.00167][1.00167]
25000 = R[{(0.083)}/0.00167][1.00167]
25000 = R[49.7][1.00167]
25000 = 49.78R
R = 25000/49.78
R = 502.2
