A local sponsor wishes to make an endowment for scholarship of $2,000 a year to our school but proposes that the first payment should not be made until four years. If long term investments can fetch 8 percent per annum, calculate  the (present) value of the endowment (donation).

Answer rating: 100% (QA)

To calculate the present value of the endowment we need to discount the future payments back to their present value using the given interest rate of 8 percent per annum Since the first payment will be made after four years we will discount each future payment ... View the full answer