Answer:
PV= $21,188,028.49
Explanation:
Giving the following information:
Cash flow= $2,000,000 at the end of each year for the next 20 years.
Interest rate= 7%
We need to calculate the present value of the annuity. First, we need to calculate the future value of the annuity:
FV= {A*[(1+i)^n-1]}/i
A= cash flow
FV= {2,00,000*[(1.07^20)-1]/0.07
FV= $81,990,984.64
Now, we can calculate the present value:
PV= FV/(1+i)^n
PV= 81,990,984.64/ (1.07^20)
PV= $21,188,028.49