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.

The formula for finding present value of an ordinary annuity is:
, where P - money to be deposited, i - interest rate, n - number of payments.

So in this case, P = 25312, i = 6.2 / 100 = 0.062, n = 20.

Now, we have everything needed to determine how much money must be deposited:


So the answer is $285,671.06.