« previous next »

Author Question: Nic is a great basketball player with a long professional career in front of him. He plays for a ... (Read 87 times)

EAugust

  • Hero Member
  • *****
  • Posts: 550
on: Jul 11, 2018
Nic is a great basketball player with a long professional career in front of him. He plays for a European professional team that has made him a very interesting offer.
 
  If he will take a below market salary beginning one year from today, they will guarantee a 5 annual raise forever - even after he stops playing ball. If the offer is for a 5,000,000 salary to be received one year from today with subsequent payments as described, what is the present value of the contract offer if the cash flows should be discounted at a rate of 12?
  A) 71,428,571
  B) 75,000,000
  C) 41,666,667
  D) 43,750,000

Question 2

Today is your 21st birthday and your bank account balance is 25,000. Your account is earning
  6.5 interest compounded daily. How much will be in the account on your 50th birthday?
 
  A) 164,631 B) 163,823 C) 162,183 D) 159,795
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
Buy Test-Bank


dantucker

  • Sr. Member
  • ****
  • Posts: 346
Reply #1 on: Jul 11, 2018
Answer to Question 1

A
Explanation: A) PV = PMT/(r-g) 5,000,000/(.12-.05 ) = 71,428,571

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

Coca-Cola originally used coca leaves and caffeine from the African kola nut. It was advertised as a therapeutic agent and "pickerupper." Eventually, its formulation was changed, and the coca leaves were removed because of the effects of regulation on cocaine-related products.

Did you know?

Alcohol acts as a diuretic. Eight ounces of water is needed to metabolize just 1 ounce of alcohol.

Did you know?

Women are two-thirds more likely than men to develop irritable bowel syndrome. This may be attributable to hormonal changes related to their menstrual cycles.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

Narwhal plays volleyball Narwhal plays volleyball
Great Wild Goose Pagoda at Ci'én Temple, Xi'an, Shanxi. Great Wild Goose Pagoda at Ci'én Temple, Xi'an, Shanxi.
Long-term Potentiation in the granule cell layer of the rat hippocampal dentate gyrus. (Traces ... Long-term Potentiation in the granule cell layer of the rat hippocampal dentate gyrus. (Traces ...
The Great Ocean Conveyor The Great Ocean Conveyor
A tightrope walker walks across a 30-m long wire tied between two poles. The center of the wire ... A tightrope walker walks across a 30-m long wire tied between two poles. The center of the wire ...
The Hotair long noncoding RNA regulates chromatin The Hotair long noncoding RNA regulates chromatin
Video: Spinal Cord Injury Animation

For a complete list of videos, visit our video library