Question
Two rival football fans have made the following wager: if one fan's college football team wins the conference title outright, the other fan will donate
Two rival football fans have made the following wager: if one fan's college football team wins the conference title outright, the other fan will donate $1,800 to the winning school. Both schools have had relatively unsuccessful teams, but are improving each season. If the two fans must put up their potential donation today and the discount rate is 9% for the funds, what is the required upfront deposit if we expect a team to win the conference title in 5 years?
I keep getting $1,149.66 in my calculator, but on my study guide, it says the answer is $1,169.88 and I am wondering as to what I am doing wrong. I do not have a finance calculator, just a TI-83 Plus with inputs of:
N=60
I% = 9
PV = ?
PMT = 0
FV = 1800
P/Y = 12
C/Y = 12
PMT = END
Any help as to how to solve this with what inputs would be appreciated. Thanks.
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