esterday, Tom Brady, a professional football player, announced that after his retirement he'll move to the broadcasting booth as an Analyst for a reported $375 million, 10 year contract. Given the following, what's the least amount of money Tom would accept TODAY as opposed to getting $37.5 million a year for the next ten years. Tom retires today and begins

esterday, Tom Brady, a professional football player, announced that after his retirement he'll move to the broadcasting booth as an Analyst for a reported $375 million, 10 year contract. Given the following, what's the least amount of money Tom would accept TODAY as opposed to getting $37.5 million a year for the next ten years. Tom retires today and begins

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter15: Taxing Business Income

Section: Chapter Questions

Problem 3DQ

See similar textbooks

Similar questions

Your father's employer was just acquired, and he was given a severance payment of $375,000, which he invested at a 7.5% annual rate. He now plans to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. How many years will it take to exhaust his funds, i.e., run the account down to zero?
Sam Smith is currently employed as a mechanical engineer and is paid$65,000 per year plus benefits that are equal to 30 percent of his salary. Sam wants to begin a consulting firm and decides to leave his current job.After his first year in business, Sam’s accountant informs him that he hasmade $45,000 with his consulting business. Sam also notices that he paid$6,000 for a health insurance policy, which was his total benefit during hisfirst year. What was Sam’s opportunity cost?
Victor Oladipo is retiring from the NBA. Under terms defined by his professional league, Mr. Oladipo has a choice. He can receive either (a) monthly payments of $21,000 each for 20 years (240 total monthly payments) with the first monthly payment occurring precisely five years from today or (b) monthly payments of $18,425 each for 20 years (240 total monthly payments) with the first monthly payment occurring one month from today. The appropriate rate for valuing these cash flows is 2.64%/year. A creative investments firm in Carmel, IN wants to purchase the rights to this retirement package today. Victor is interested in receiving a lump sum of cash today in exchange for the retirement package. Both parties are in agreement on all information provided here. Calculate a fair price at which such an exchange could occur
Carl Hightop, a popular basketball player, has been offered a four-year salary deal. He can either accept $4,000,000 now or accept monthly amounts of $90,000 payable at the end of each month. If money can be invested at 3.4% compounded quarterly, which option is the better option for Carl and by how much?
After numerous years as a senior executive in the professional wrestling business, Aunt Edna is planning to retire on December 31, 2020. Her company has offered her two retirement choices. The first is twenty end-of-the-year payments of R122 000 each starting on December 31, 2021 and the second is a lump sum of R2.25 million payable on January 1, 2020. Which one should she pick if her opportunity cost of the money is 6.60%
A man who is 30 years old at the start of the year, is considering getting an MFM degree. He currently earns $40,000 per year and expects to continue earning that amount for the rest of his working life (until age 65). He will give up his income for two years and will pay $20,000 per year in tuition, if he attends business school. In exchange, he expects a raise in his salary after completing his MFM. Assume that the post-graduation salary grows at a 5% annual rate and that the discount rate is 8%. What is the minimum expected starting salary after graduation for him that makes attending business school a positive-NPV investment? (Assuming that all cash flows happen at the end of each year.) Use Time Value of Money calculations.
After numerous years as a senior executive in the professional wrestling business, aunt Edna is planning to retire on December 31, 2020. Her company has offered her two retirement choices. The first is a twenty end-of-the year payments of $122,000 each starting on December 31, 2021 and the second is a lump sum of $2.25 million payable on January 1, 2020. Which one should she pick if her opportunity cost of the money is 6.60%? Show all your work.
At the beginning of the year, a high school football coach decided to leave his job and give up his annual coaching salary of $65,000 and open his own sporting goods store. A partial income statement for follows: To get the sporting goods store opened, the former coach used $80,000 of his personal savings. The coach opened his store in a building that he owns. Prior to opening his store, the building was rented for $31,000 per year. The coach could have earned 5 percent return by investing in stocks of other new businesses with risk levels similar to the risk level associated with his new sporting goods store. 1)The former high school coach incurs $_____ of total explicit costs for using market-supplied resources. 2)The opportunity cost of the owner’s equity capital is $_____ annually. 3)Total implicit cost of owner-supplied resources is $ 4)Total economic cost is $_____. 5)Accounting profit is $_____ 6)By how much did coach’s wealth change by opening the sporting…
Answer the following problems and explain it step by step: 1. A man who is 30 years old at the start of the year, is considering getting an MFM degree. He currently earns $40,000 per year and expects to continue earning that amount for the rest of his working life (until age 65). He will give up his income for two years and will pay $20,000 per year in tuition, if he attends business school. In exchange, he expects a raise in his salary after completing his MFM. Assume that the post-graduation salary grows at a 5% annual rate and that the discount rate is 8%. What is the minimum expected starting salary after graduation for him that makes attending business school a positive-NPV investment? (Assuming that all cash flows happen at the end of each year.) 2. Bob and Rose are both 62 years old and plan to retire in 3 years. They will receive $5,000 per month after taxes from pension plans and $1,000 per month after taxes from Social Security after retirement. Regrettably, their living…
The football coach at a midwestern university was given a 5-year employment contract that paid $800,000 the first year, and increased at an 8% uniform rate in each subsequent year. At the end of the first year’s football season, the alumni demanded that the coach be fired. The alumni agreed to buy his remaining years on the contract by paying him the equivalent present sum, computed using a 6% interest rate. How much will the coach receive?
To prevent him from taking a job elsewhere, the University of Tennessee offers head coachJosh Heupel a new contract that makes annual, end-of-year payments. His first year’s salarywill be $5 million. To keep up with market conditions, his annual salary will increase by 2%per year in subsequent years. After receiving the 20th of these growing payments, he willretire and be paid a constant year-end amount of $1 million per year for 30 additional years.If the appropriate discount rate is 10%, what is the present value of this new contract?
Sarah earns an annual salary of £76,000, working for an investment bank. She is considering resigning and setting up her own business. Sarah estimates that the new business requires an initial investment of £96,000 for fixed assets with an expected useful life of five years. Forecast revenues and expenses for the first year of operations are. Sales Operating Expenses Rent Lease of equipment Staff salaries Supplies Utility bills Insurance Business rates Advertising Legal, audit and banking fees £320,000 £52,000 £13,250 £126,500 £22,000 £8,500 £2,500 £4,200 £7,000 £2,500 Sarah has personal savings sufficient to finance 70% of the initial investment. She is currently earning an annual interest rate of 1.2% on the savings. The rest of the investment finance would be provided by a five-year bank loan at a fixed annual rate of 5.9%. Required: a) Calculate the accounting profit for the first year of operations. Assume that the fixed assets are fully depreciated on a…