You are head of the Schwartz Family Endowment for the Arts. You have decided to fund an arts school in the San Francisco Bay area in perpetuity. Every seven years, you will give the school $6.5 million.

22a. The first payment will occur seven years from today. If the interest rate is 5% per year compounded annually, what is the time t=0 present value of the gift?

The present value of the gift is:

22b. Now assume that the first payment will occur four years from today. If the interest rate is 5%

per year compounded annually, what is the time t=0 present value of the gift?

The present value of the gift is: