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Problem:

A wealthy philanthropist has established the following endowment for a hospital. The details are as follows: a cash deposit of $ 10 M one year from now; an annual cash deposit of $5M per year for the next five years. The first $2M will start today. At the end of 5 years, the hospital will also receive a lump sum payment of $15M.

Required:

Question: Assuming the cost of money is 5%, what is the value of this endowment in today's dollars?

Note: Show all workings.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148115

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