Kwantlen University received a signiﬁcant donation of $50,000 per year for the next ﬁfteen years, with the ﬁrst payment being received today. Given a discount rate of 5.5%, determine the present
Value of the donation.

Question

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula for the present value of an annuity due, since the first payment is received today. The formula is: PV = Pmt * [(1 - (1 + r)^-n) / r] * (1 + r), where Pmt is the annual payment, r is the discount rate, and n is the number of periods. Plugging in the values: PV = 50000 * [(1 - (1 + 0.055)^-15) / 0.055] * (1 + 0.055) = $529,482.

Kwantlen University Received a Signiﬁcant Donation of $50,000 Per Year