We have to calculate the monthly payments for an annuity of $34,000 with a 2% interest rate for 60 months.
We then can express the monthly payment as:
[tex]\text{PMT}=\frac{PV\cdot\frac{r}{m}}{1-(1+\frac{r}{m})^{-n\cdot m}}[/tex]where PV = 34000, r = 0.02 (the annual interest rate in decimal form), m = 12 (number of subperiods per year) and n = 5 (the number of annual periods).
We can replace with the values and solve for PMT as:
[tex]\begin{gathered} \text{PMT}=\frac{34000\cdot\frac{0.02}{12}}{1-(1+\frac{0.02}{12})^{-5\cdot12}} \\ \text{PMT}\approx\frac{34000\cdot0.00167}{1-(1.00167)^{-60}} \\ \text{PMT}\approx\frac{56.67}{1-0.905} \\ \text{PMT}\approx\frac{56.67}{0.095} \\ \text{PMT}\approx595.94 \end{gathered}[/tex]Answer: the monthly payments will be approximately $595.94.
