Bridget Jones has a contract in which she will receive the following payments for the next five years: $6,000, $7,000, $8,000, $9,000, $10,000. She will then receive an annuity of $13,500 a year from the end of the sixth year through the end of the 15^th year. The appropriate discount rate is 13 per cent.

a. What is the present value of all future payments? (Use a Financial calculator to arrive at the answer. Round the final answer to the nearest dollar amount.)

Present value $

b. If she is offered a buyout of the contract for $35,000, should she do it?

multiple choice

• Yes

• No