1. .Shigei Ohtani, the Los Angeles Dodgers slugger has been offered a contract for $800 million. The contract calls for a payment of $20 m per year for 10 years and $100 m per year for the following 6 years. How much is that contract worth today if the interest rate is 10 percent per year 2. Your current salary is 100,000 per year. If you save 10 percent of your salary and invest it at 6% per year a) How much will you have at the end of 30 years? b) How much will you have at the end of 30 years if your salary grows at 6% per year. 3. You earn 10 percent in 2020, 15 percent in 2021.. a) What is your arithmetic average return? b) What is your geometric average return? c) Your IRR if you invest $100 at the beginning of 2020, $200 at the beginning of 2021 and withdraw all your funds at the end of 2021.

Answer rating: 100% (QA)

1 To determine the present value of the contract we need to discount the future cash flows to their present value using the given interest rate Given Payment for the first 10 years 20 million per year ... View the full answer