Question
Use the following to answer questions 5 - 8 (round to nearest whole dollar) The four actors below have just signed a contract to star
Use the following to answer questions 5 - 8 (round to nearest whole dollar)
The four actors below have just signed a contract to star in a comedy. Each person signs independent contracts with the following terms:
Contract amount. How contract is paid
Actor 1 $1,500,000 Lump sum in 4 years
Actor 2 1,550,000 Lump sum in 5 years
Actor 3 375,000 Every year for 4 years
Actor 4 310,000 Every year for 5 years
Assume an annual discount rate of 6% (compounded annually). 5. $_________
What is the value of Actor 1s contract today (round to nearest dollar)? 6. $_________
What is the value of Actor 2s contract today (round to nearest dollar)? 7. $_________
What is the value of Actor 4s contract today (round to nearest dollar)? 8. $__________
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