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BCPC 203: Introduction to Business Finance QUESTION ONE A Ghanaian football player has recently been approached by 5 top football clubs from Europe offering to
BCPC 203: Introduction to Business Finance QUESTION ONE A Ghanaian football player has recently been approached by 5 top football clubs from Europe offering to sign him on. All five clubs are offering packages to this youngster who excelled in a just ended tournament. A summary of the clubs and their offers are shown below: i. Bologna F.C based in Italy offers to pay USD$200,000 every year over the contract period. ii. FK Zalgiris based in Lithuania proposes a total package of USD$1,050,000 at the end of the contract period. iii. Panathinaikos based in Greece is offering USD$195,000 every year but payable at the start of each year. iv. SC Bastia based in France is also offering a total package of USD$897,000. Although this is the total contract value over the 5-year period, the club manager however, added that if the player signs for SC Bastia, the whole amount will be paid to him immediately. v. FC Dynamo Kyiv based in Ukraine proposes an annual payment of USD$32,000. The club adds that the player will be entitled to this package even after the contract period up to a time the player will be tired of receiving the payments. The contract duration for all the five clubs is 5-years and may be renewed afterwards. Analyst expect that interest rates will be relatively stable and will average at 4% P.A throughout the contract period. Requirement As a financial analyst, you are confronted with these five offers, what would be your advice to the Ghanaian Footballer as to his choice of the Club to go for on the basis of your understanding of time-value of money
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