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.

Because each payment is made at the end of the year, this is an ordinary annuity. Its present value is $25,312 × [1 − (1.062)^−20] ÷ 0.062, which is approximately $285,671.10. Therefore, the deposit needed is $285,671.10, choice C.

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