Answer: To calculate the amount of money you would need to invest in a period annuity that offers 4.5% APR compounded monthly for 20 years to receive an annual income of $42,000, you can use the following formula:
PV = A * [(1 - (1+r)^(-n)) / r]
where:
PV = present value (amount of money you need to invest)
A = annual income ($42,000 in this case)
r = interest rate per period (4.5% APR compounded monthly, or 0.045/12 = 0.00375 per month)
n = total number of periods (20 years x 12 months per year = 240 months)
Plugging in the numbers, we get:
PV = $42,000 * [(1 - (1+0.00375)^(-240)) / 0.00375]
PV = $553,229.03
Therefore, the answer is (A) $553,229.03.
Explanation: