Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer the three questions. You receive $25,000 now that you invest for 6% for 10 years. At the end of that 10 year timeframe,

image text in transcribedimage text in transcribedimage text in transcribed

Please answer the three questions.

You receive $25,000 now that you invest for 6% for 10 years. At the end of that 10 year timeframe, you take whatever the pot is worth after the end of the 10 years and invest that into a different investment instrument that you will earn 9% annually for the next 5 years. How much will the original $25,000 be worth at the end of the 15 years? I do not want to know the gain; rather, I want to know how much the pot will be worth. $70,542 $69,524 $68,264 $68,886 Bill Wilson's cousin, Luigi, also received a football contract offer with the following terms: Signing Bonus: $500,000 $500,000 at the end of year one $600,000 at the end of year two $750,000 at the end of year three $3,000,000 at the end of each year 4 - 10. Luigi assumes he can earn 3% annually over the life of the contract. What is the Present Value of this football contract> $19,321,641 $18,842,125 $18,821,641 $19,342,125 Assume you have just completed the recording of a new song for which the recording company will pay you $19,500 each and every year for the next 20 years. Your required Rate of Return as a rational economic investor equals 8%. But, because the recording studio and you both want to move in separate directions, they're willing to offer you $175,000 as a final "go away...get lost..." What is the Present Value of the best alternative - take the deal now for $175,000 or wait and take the annual payments over the next 20 years? Wait and realize higher PF of 185,211. Wait and realize higher PV of $192,345 Wait and realize higher PV of $191,454 Take now the $175,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Valuing Agile The Financial Management Of Agile Projects

Authors: Alan Moran

1st Edition

0117082880, 9780117082885

More Books

Students also viewed these Finance questions

Question

What is other comprehensive income?

Answered: 1 week ago