FIN 2100 TVM Worksheet Name Use excel to answer the following questions. Submit both a word document with your answers and your excel file. 1. Negotiating a Contract. You are the financial advisor for Josh Allen and he is negotiating his first contract with the Buffalo Bills. He is offered three possible 4-year contracts. Each contract would have a signing bonus of $10,000,000 plus pay a lump sum at the end of each year. The annual payments are provided below. All payments are fully guaranteed. 2 3 4 Contract 1 $3,000,000 $3,000,000 $3,000,000 $3,000,000 Contract 2 Contract 3 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $7,000,000 $1,000,000 $1,000,000 $1,000,000 If you figure his opportunity cost at 10%, which contract would you recommend. 2. Extending Credit. You recently went through the Entrepreneurship program at LCCC. You developed a business plan and got it funded. Your store has been doing quite well as a cash only store. However, you know that you are missing some sales by not extending credit. You talked to your bank and they will finance this credit for 6% compounded monthly. What EAR is the bank charging? 3. Lawsuit Settlement. A woman sues the city of Cheyenne for injuries sustained one year ago. It is December 31, 2018, a jury awards the woman lost wages plus $100,000 for pain and suffering and $20,000 for her legal expenses. She has been unable to work since the accident and will be unable to work again. She was likely to work five more years and was making $36,000 when the accident occurred. The judge has ordered the city to pay all wages in the form of a present value of the earnings, assuming that wages are dispersed at the end of the year. If she was likely to receive a 3% annual raise and a 7% discount rate is utilized, how much money will be awarded to her? Note: This is an Annuity Growth problem. You will find the growth formulas your PowerPoint slides. in 4. Saving for Retirement. You are helping your 50 year old father save for retirement. He would like to retire in 10 years and would like to have enough to live on another 25 years. He currently lives on about $40,000 per year and would like to maintain the same standard of living. You would like to set up ar annuity that pays him a lump sum at the beginning of each year for those 25 years. He currently has $100,000 saved up. Utilizing an 8% discount/compounding rate, how much would he have to deposit at the end of each of the next 10 years to have enough to retire?