Don Draper has signed a contract that will pay him $50,000 at the end of each year for the next 8 years, plus an additional $150,000 at the end of year 8. If 7 percent is the appropriate discount rate, what is the present value of this contract?
Don Draper has signed a contract that will pay him $50,000 at the end of each year for the next 8 years, plus an additional $150,000 at the end of year 8. If 7 percent is the appropriate discount rate, what is the present value of this contract?
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 16DQ
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Question
Don Draper has signed a contract that will pay him
$50,000 at the end of each year for the next
8 years, plus an additional
$150,000 at the end of year
8. If
7 percent is the appropriate discount rate, what is the present value of this contract?
Question content area bottom
Part 1
The present value of the contract is $
enter your response here
. (Round to the nearest cent.)
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