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Sabrina who is a pop singer is planning to sign a contract with a major music label. Based on the signed contract, she is going
Sabrina who is a pop singer is planning to sign a contract with a major music label. Based on the signed contract, she is going to receive $200,000 today, $150,000 per year for the first 6 years (the first payment to be paid to her at the end of year 1), and $190,000 per year for the next 5 years (the first higher payment to be paid at year 7). How much does this contract worth at the time she signs it, if the interest rate is 5% per year? Draw the cash flow diagram before you solve this problem.
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