Good day. I have completed the following table except for line 29 (highlighted in yellow). I need to see the calculation for the total nominal value. I also noticed the total discounted value to be $16,922 less than all of the discounted values. All of the discounted values equals $2672764. Problem 1 (second box) addresses this issue. I need to understand the reason $16,922 was not included in the total discounted value, and check all boxes of problem 1 that apply. I also need a calculation for problem 2 as well. Thank you.
B C D E F Assumptions and Calulated Values 2 Bank Rate Information: Colin's Bank Account Rate (compounded monthly) 6.0000% Monthly Bank Rate 0.5000% Effective Annual Interest Rate 5.1678% Salary and Bonus Information: Year 1 Year 2 Year 3 Year 4 Total value Annual Salary (4% COLA adjustment) $504,000 $524,160 $524,160 $545,126 $2,097,446 Monthly Salary 42,000 43,680 43,680 45,427 LO Discount factor (based on Cell B4 above) 11.6189 10.9439 10.3081 .7093 11 Discounted Annual Salary 487,994 478,030 450,258 441,064 $1,857,346 13 Time-in-League Bonus $10,000 $10,000 14 Discount factor (based on Cell B4 above) 0.9705 15 Discounted Time-in-League Bonus 9,705 $9,705 16 17 Milestone Bonus $150,000 $150,000 $150,000 $150,000 $600,000 18 Discount factor (based on Cell B5 above) 0.9419 0.8872 0.8356 0.7871 19 Discounted Milestone Bonus 141,285 $133,080 125,340 118,065 $517,770 20 21 Performance Bonus $75,600 $78,624 $78,624 $81,769 $314,617 22 Discount factor (based on Cell B5 above) 0.9419 0.8872 0.8356 0.7871 23 Discounted Performance Bonus 71,208 $69,755 65,698 64,360 $271,021 24 25 Monthly Endorsement Contract Payment $750 $750 $1,500 26 Discount factor (based on Cell B4 above) 11.6189 10.9439 27 Discounted Monthly Endorsement Payment 3,714 $8,208 $16,922 28 29 Contract's Total Nominal Value 30 Contract's Total Discounted Value $2,655,842 1. Given your worksheet calculations, which of the following statements is accurate? Noah's estimate of the value of Colin's contract accurate on either a nominal or discounted basis? Check all that apply. Noah's estimate of the value of Colin's contract is incorrect on a nominal basis, and the error is $63,663. It is appropriate and necessary to discount the endorsement contract using the bank account's effective annual interest rate because of differences in the timing of the compounding of the bank account and that of the payments on the endorsement contract. Noah's estimate of the nominal value of Colin's contract is correct. 2. The local car dealer creating Colin's endorsement contract can earn 6% (compounded quarterly) on her deposited funds. She would have to deposit each quarter, starting exactly two years before the day Colin signs his contract, to fund her endorsement contract. [Note: The future value interest factor of 6% compounded quarterly for eight quarterly periods is 8.4328.]
