If you wanted to withdraw $12,000 from a bank account at the end of each of the next 20 years, approximately how much would you have to invest in the account today assuming a 6% interest rate?

Present value of annuity P = $137,639.05 (Approx)

Explanation:

Given:

Amount withdraw A = $12,000

Number of year n = 20

Rate r = 6%

Find:

Present value of annuity P

Computation:

P = A[1-(1+r)⁻ⁿ]/r

P = 12,000[1-(1.06)⁻²⁰]/0.06

P = 12,000 x 11.46992122

P = 137,639.05 (Approx)

Present value of annuity P = $137,639.05 (Approx)

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