As part of your retirement plan, you want to set up an annuity in which a regular payment of $25,312 is made at the end of each year. you need to determine how much money must be deposited earning 6.2% compounded yearly in order to make the annuity payment for 20 years.

$285,413.23

Step-by-step explanation:

We know the annuity formula is given by,

,

where P = regular payment, PV = present value, r = rate of interest and n = time period.

According to the question, we need to find the money to be deposited at the start of the year i.e. PV

So, re-arranging the formula and substituting the values gives us,

i.e.

i.e.

i.e.

i.e.

i.e.

Hence, the amount to be deposited at the start of the year is $285,413.23.