Question
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 $1,920.00
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 $1,920.00 at the end of each year for the next 15.00 years. If the graduates discount rate is 5.00%, 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?
A despised football coach is scheduled to make $841,900.00 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 2.00%.
A despised football coach is scheduled to make $841,900.00 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 2.00%.
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 | $523,000.00 | 0 | $300,600.00 |
| 1 | $523,000.00 | 1 | $300,600.00 |
| 2 | $523,000.00 | 2 | $812,050.00 |
| 3 | $523,000.00 | 3 | $812,050.00 |
| 4 | $523,000.00 | 4 | $812,050.00 |
The newspapers report the total dollars of the contract, so contract A will pay a total of $2,615,000.00, while contract B will pay $3,037,350.00. The player will select contract B as it has more publicity. The team can earn 8.00% on their investments, so let's determine the value of each contract.
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 | $523,000.00 | 0 | $300,600.00 |
| 1 | $523,000.00 | 1 | $300,600.00 |
| 2 | $523,000.00 | 2 | $812,050.00 |
| 3 | $523,000.00 | 3 | $812,050.00 |
| 4 | $523,000.00 | 4 | $812,050.00 |
The newspapers report the total dollars of the contract, so contract A will pay a total of $2,615,000.00, while contract B will pay $3,037,350.00. The player will select contract B as it has more publicity. The team can earn 8.00% on their investments, so let's determine the value of each contract.
What is the present value of contract B?
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 | $523,000.00 | 0 | $300,600.00 |
| 1 | $523,000.00 | 1 | $300,600.00 |
| 2 | $523,000.00 | 2 | $812,050.00 |
| 3 | $523,000.00 | 3 | $812,050.00 |
| 4 | $523,000.00 | 4 | $812,050.00 |
The newspapers report the total dollars of the contract, so contract A will pay a total of $2,615,000.00, while contract B will pay $3,037,350.00. The player will select contract B as it has more publicity. The team can earn 8.00% on their investments, so let's determine the value of each contract.
Which contract would the team prefer to sign with the player? (A or B)
A frustrated wife has a husband who makes a trip to Las Vegas once a year with his college buddies. The average cost of each trip is $2,550.00. If this trip will be completed every year for the next 32.00 years, what is the cost in todays dollars to the couple? Assume a discount rate of 5.00%.
An insurance company quotes you a policy that requires you to pay $800.00 at the beginning of each month for the following year. If you can earn 5.64% APR with monthly compounding on your investments, what is the value of this policy in today's dollars? (express as positive number)
An investor plans the following investments for the next 20 years: 5.00 years of $10,950.00 per year, and 15.00 years of $13,850.00 per year. She thinks his investments will earn 6.00% a year for the first 5.00 years, and then earn 9.00% per year for the last 15.00 years. How much would the investor have to set aside today if she wants to fund the entire account?
An investor is considering an offer to buy equity in a start-up company. The investor will not receive in cash flows from the company until 14.00 years from today. At that time he will receive 10.00 consecutive annual payments of $52,911.00. The investor wants a 27.00% return on his investment. How much can he pay today for this opportunity to receive his return?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Marketing Research
Authors: Carl McDaniel Jr, Roger Gates
10th Edition
9781118808849
