What amount must be set aside now to generate payments of 20

What amount must be set aside now to generate payments of $20,000 at the beginning of each year for the next 12 years if money is worth 5.45%, compounded annually? (Round your answer to the nearest cent.)

Solution

Particulars Time PVF Amount Present Value Annual Payments 0               0.9483                  20,000.00                                      18,966.33 Annual Payments 1               0.8993                  20,000.00                                      17,986.09 Annual Payments 2               0.8528                  20,000.00                                      17,056.51 Annual Payments 3               0.8087                  20,000.00                                      16,174.98 Annual Payments 4               0.7670                  20,000.00                                      15,339.00 Annual Payments 5               0.7273                  20,000.00                                      14,546.23 Annual Payments 6               0.6897                  20,000.00                                      13,794.43 Annual Payments 7               0.6541                  20,000.00                                      13,081.49 Annual Payments 8               0.6203                  20,000.00                                      12,405.40 Annual Payments 9               0.5882                  20,000.00                                      11,764.25 Annual Payments 10               0.5578                  20,000.00                                      11,156.23 Annual Payments 11               0.5290                  20,000.00                                      10,579.64 Amount to be set aside                                  1,72,850.60