Exercise 5-5 (Algo) Present value; single amount (LO 5-3)

The four actors below have just signed a contract to star in a dramatic movie about relationships among hospital doctors. Filming is expected to take two years to complete. Each person signs independent contracts today with the following terms:

	Contract Terms
	Contract Amount	Payment Date
Derek	$ 500,000	2 years
Isabel	540,000	3 years
Meredith	450,000	Today
George	400,000	1 year

Required:

1-a. Assuming an annual discount rate of 10%, calculate the present value of the contract amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

Derek
Isabel
Meredith
George