Question 1190444
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Present value of annuity
PV = C*(1 - (1+i)^(-n))/i


C = amount of cash needed per period = $24,000
i = interest rate per period = 0.0804
n = number of periods = 20
Each period is one year.


PV = C*(1 - (1+i)^(-n))/i
PV = 24000*(1 - (1+0.0804)^(-20))/0.0804
PV = 234,935.78356008
PV = 234,935.78 


Interpretation:
If you want 20 annual withdrawals of $24,000 spaced into the future, then you must have $234,935.78 currently today (aka present value). Those 20 future payments are equivalent this current present value payment. This is when we take into account the 8.04% interest rate, compounded annually.



Answer: $234,935.78
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