4. ESPN currently pays the NFL $1.1 billion per year for eight years for the right to...
Question:
4. ESPN currently pays the NFL $1.1 billion per year for eight years for the right to exclusively televise
Monday night football. What is the net present value of this investment if the parent Disney Company
has an opportunity interest rate equal to its cost of capital of 9 percent? Fox and CBS agreed to pay $712
million and $622 million respectively for six years to televise Sunday afternoon NFC games. What was
that worth?
Answers that Course Hero gives are below. I am wondering where the 5.534819 and the 4.4859 come from and how to show my work behind those percentages....
Answers:
$1.1 billion discounted at 9% for 8yrs results in the following:
Net present Values of $1.1 billion = $1.1 billion * 5.534819 = $6.08830102609 billion
$712 million & $622 million discounted at 9% for 6 years results in the following.
$712 million * 4.4859 = $3,193,974,036.19
$622 million * 4.4859 = $2,790,241,363.07
(
$3,193,974,036.19 + $2,790,241,363.07) = $5,984,215,399.26
Resulting in a total worth of = $5,984,215,399.26