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You operate a charity and have been promised a gift from a large donor. The donor will give you 1,000,000 today and an additional $500,000

You operate a charity and have been promised a gift from a large donor. The donor will give you 1,000,000 today and an additional $500,000 every two years in perpetuity. Assume the risk-free rate is 8%.

i) What is the present value of the donation?

ii) Suppose instead that the donor changes the arrangement to end in 20 years. What is the new present value of the donation?

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