Calculating the Present Value of a Gift

To calculate the present value of the gift of $2,000 per year for the next four years at a discount rate of 12%, we can use the formula:

Formula for Present Value Calculation:

pv = $2,000 x (annuity fv factor, i = 12%, n = 4)

This formula takes into account the annual payment, the discount rate, and the number of years over which the payments are made. By using the annuity future value factor at a 12% discount rate for a period of 4 years, we can calculate the present value of the gift.