Answer:
$250,939,550
Explanation:
Data provided in the question:
Payout, P = $25 million = $25,000,000
Number of years, n = 15 years
Rate of return, r = 5.50% = 0.055
Now,
Present value = [tex]P \times\left[ \frac{1-(1+i)^{-n}}{i} \right][/tex]
on substituting the respective values, we get
Present value = [tex]\$25,000,000\times\left[ \frac{1-(1+0.055)^{-15}}{0.055} \right][/tex]
Present value = [tex]\$25000000 \cdot \left[ \frac{1 - 1.055^{-15}}{ 0.055} \right][/tex]
Present value = [tex]\$25,000,000 \cdot \left[ \frac{1 - 0.447933}{ 0.055} \right][/tex]
Present value = 25000000 × 10.037582
or
Present value = $250,939,550
