As part of your retirement plan, you want to set up an annuity in which a regular payment of $35,000 is made at the end of each year. you need to determine how much money must be deposited earning 6% compounded annually 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 = 35000, i = 6 / 100 = 0.06, n = 20.

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


So the answer is $401,447.24.