Question 1190446
<font color=black size=3>
Present value of annuity
PV = C*(1 - (1+i)^(-n))/i


C = amount of cash needed per period = $24,000/12 = $2,000
i = interest rate per period = 0.0804/12 = 0.0067 exactly
n = number of periods = 20*12 = 240 months
Each period is one month.


PV = C*(1 - (1+i)^(-n))/i
PV = 2000*(1 - (1+0.0067)^(-240))/0.0067
PV = 238,398.570184098
PV = 238,398.57


Interpretation:
If you want 240 monthly withdrawals of $2,000 spaced into the future (aka $24,000 per year for 20 years), then you must have $238,398.57 currently today. Those 240 future payments are equivalent this current present value payment. This is when we take into account the 8.04% interest rate, compounded monthly.



Answer: <font color=red>$238,398.57</font>
</font>