Question
1.) A young graduate has been offered a time-share on a condo in Steamboat Springs, Colorado. To be a part owner, the graduate must pay
1.) A young graduate has been offered a time-share on a condo in Steamboat Springs, Colorado. To be a part owner, the graduate must pay $1,533.00 at the end of each year for the next 20.00 years. If the graduates discount rate is 7.00%, what is the cost of this opportunity in todays dollars? In other words, what is the most the graduate should be willing to pay today instead of making payments?
2.) A despised football coach is scheduled to make $821,500.00 per year for the next 8 years. The first payment is scheduled to be made exactly one year from today. After a 3-9 record last year, the athletic department would like to buy out the remaining 8 years of his contract. The athletic department wants to value the remaining years with a 9.00% discount rate. The coachs agent would like to use 4.00%.
What is the present value of the athletic department offer?
3.) A despised football coach is scheduled to make $821,500.00 per year for the next 8 years. The first payment is scheduled to be made exactly one year from today. After a 3-9 record last year, the athletic department would like to buy out the remaining 8 years of his contract. The athletic department wants to value the remaining years with a 9.00% discount rate. The coachs agent would like to use 4.00%.
What is the present value of the agents offer?
4.) A creative general manager has offered two different contracts to a vain quarterback. The contracts are shown below:
CONTACT A | CONTRACT B | ||
---|---|---|---|
YEAR | SALARY | YEAR | SALARY |
0 | $510,000.00 | 0 | $307,300.00 |
1 | $510,000.00 | 1 | $307,300.00 |
2 | $510,000.00 | 2 | $805,000.00 |
3 | $510,000.00 | 3 | $805,000.00 |
4 | $510,000.00 | 4 | $805,000.00 |
The newspapers report the total dollars of the contract, so contract A will pay a total of $2,550,000.00, while contract B will pay $3,029,600.00. The player will select contract B as it has more publicity. The team can earn 6.00% on their investments, so let's determine the value of each contract.
What is the present value of contract A?
5.) A creative general manager has offered two different contracts to a vain quarterback. The contracts are shown below:
CONTACT A | CONTRACT B | ||
---|---|---|---|
YEAR | SALARY | YEAR | SALARY |
0 | $510,000.00 | 0 | $307,300.00 |
1 | $510,000.00 | 1 | $307,300.00 |
2 | $510,000.00 | 2 | $805,000.00 |
3 | $510,000.00 | 3 | $805,000.00 |
4 | $510,000.00 | 4 | $805,000.00 |
The newspapers report the total dollars of the contract, so contract A will pay a total of $2,550,000.00, while contract B will pay $3,029,600.00. The player will select contract B as it has more publicity. The team can earn 6.00% on their investments, so let's determine the value of each contract.
What is the present value of contract B?
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