« previous next »

Author Question: Nic is a great basketball player with a long professional career in front of him. He plays for a ... (Read 35 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?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

Oxytocin is recommended only for pregnancies that have a medical reason for inducing labor (such as eclampsia) and is not recommended for elective procedures or for making the birthing process more convenient.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

The Romans did not use numerals to indicate fractions but instead used words to indicate parts of a whole.

Did you know?

Sperm cells are so tiny that 400 to 500 million (400,000,000–500,000,000) of them fit onto 1 tsp.

Front view of the cranium and facial bones. Front view of the cranium and facial bones.
An 1872 Grant campaign poster of “Our Three Great Presidents” at best got it two-thirds right. An 1872 Grant campaign poster of “Our Three Great Presidents” at best got it two-thirds right.
A port fuel-injected engine that is equipped with long, tuned intake-manifold runners. A port fuel-injected engine that is equipped with long, tuned intake-manifold runners.
How long does it take for 90% of a sample of strontium-90 (half-life of 28.8 years) to decay? How long does it take for 90% of a sample of strontium-90 (half-life of 28.8 years) to decay?
Reconstruction Drawing Of The Great Temple Of Amun At Karnak Reconstruction Drawing Of The Great Temple Of Amun At Karnak
Video: What Are Carbohydrates? Importance of Carbs & High Carb Food

For a complete list of videos, visit our video library