Please help answer 21 a-d with steps of how to do it, not with a calc or excel. By hand please NFL 5-20 PV OF A CASH contract. ack is negotiating his first contract. His opportunity cost is 10%. He has been offered three possible 4-year contracts. Payments are and would be made at the end of each year. Terms of each contract are they as follows $3,000,000 $3,000,000 $3,000,000 Contract 1 $3,000,000 $5,000,000 $3,000,000 $4,000,000 Contract 2 $2, 000,000 $1,000,000 $1,000,000 $1,000,000 Contract 3 $7,000,000 As his adviser, which contract would you recommend that he accept? 5-21 EvALUATING LUMP suMs AND ANNUITIES missie just won the lottery, and she must $61 choose among three award options. She can elect to receive a lump sum today of million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end of ear payments of $5.5 million. a. she thinks she can earn 7% annually, which should she choose? b. If she expects to earn 8% annually, which is the best choice? c. If she expects to earn 9% annually, which option would you recommend? d. Explain how interest rates influence her choice. S 22 LOAN AMORTIZATION

b. What are the PVs of the streams at a 0% discount rate? 5-19 FUTURE VALUE OF AN ANNUITY Your client is 40 years old. She wants to begin saving for and you advise her to invest it in the stock market, which you expect to provide an avera retirement with the first payment to come one year from now. She can save $5,000 per your return of 9% in the future. . If she follows your advice, how much money will she have at 65? b. How much will she have at 70? She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70 her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? 5-20 PV OF A CASH FLOW STREAM A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 10%. He has been offered three possible 4-year contracts. Payments are guaranteed, and they would be made at the end of each year. Terms of each contract are as follows: 2 3 + + Contract 1 $3,000,000 $3,000,000 $3,000,000 $3,000,000 Contract 2 $2,000,000 $3,000,000 $4,000,000 $5,000,000 Contract 3 $7,000,000 $1,000,000 $1,000,000 $1,000,000 As his adviser, which contract would you recommend that he accept? - 5-21 EVALUATING LUMP SUMS AND ANNUITIES Crissie just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of S61 million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end-of-year payments of $5.5 million If she thinks she can earn 7% annually, which should she choose? b. If she expects to earn 8% annually, which is the best choice? If she expects to earn 9% annually, which option would you recommend? d. Explain how interest rates influence her choice. 5-22 LOAN AMORTIZATION a. a wege