on in year 2, and P3 million in year 3. Assuming end of year payments of the proceeds of the contract, how would we find the value of hid contract today if the player has a discount rate of 12%, compounding semi-annually?
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- Petrogazz convinced Mae Luna to play for their volleyball franchise for 3 seasons. They offered the player $1,000,000 in the 1st year, $2,500,000 in the 2nd year, and $3,000,000 in the 3rd year. Assuming end of year payments of the proceeds of the contract, how will we find the value of his contract today if Mae Luna has a discount rate of 12%, compounding semi-annually?A baseball player is offered a 3-year contract which pays him the following amounts at the end of each year:Year 1: $6 millionYear 2: $8 millionYear 3: $10 millionInstead of accepting the contract, the player asks for a contract that has the team paying the same total amount, but payments are equal ($8 million a year) and come at the beginning of each year for the 3 years (3 total payments). Assuming that the appropriate discount rate is 8% per year, what is the difference in the present value of two offers?The Bears are going to trade for Russell Wilson and sign him to a new 6 year contract. He gets $15 million today. Then, he gets $20 million at the end of years 1 through 6. At the end of 6 years, he gets an additional $35.768 million payment. Assume a discount rate of 8% and annual compounding. What is the PV of his contract?
- A star baseball player signs a contract that would pay a total of $16 million. The player receives $4 million upon signing, and $3 million every year for the next four years. (In other words, the player will receive $4 million today, $3 million in a year from today, etc.)At an interest rate of 4 percent, the sum of the present value of the contract is $__. Your answer should be a whole number. If the contract is spread over fewer years, the present value of the contract would __________ (options: increase or decrease)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?Lola's Furniture is offering a "houseful of furniture" for $9,999. Furthermore, if you make a down payment of $999 you can wait for 1½ years to pay the $9,000 balance. If Lola's Furniture immediately sells the $9,000 receivable contract to the Barzini Finance Group at a discount rate of 18% compounded quarterly, how much money will Lola's actually receive for the "houseful of furniture"?
- A professional athlete has signed a contract worth $56 million over 5 years. Assume that value is the value of the contract today. (a) If the contract pays out at the end of each year and the interest rate is 6% nominal annual, compounded monthly, how much is it worth at the end of each year? (b) Draw a cash flow diagram of the payouts of the cash flow in part (a). (c) If the interest rate is 6% nominal annual compounded monthly and the athlete would like to defer the payouts over a span of 25 years, calculate the monthly income over 25 years.When deciding which contract to choose based on highest present value and a 10% discount rate, if billy and his agent think that tax rates are liekly to be higher in the future how might that sway his decision? Contract 1 $900,000 signing bonus $850,000 at the end of each year for the next 5 years Contract 2 $200,000 immediate signing bonus $100,000 at the end of each year for the next five years $150,000 a year at the end of years 5 through 10 $1,000,000 a year at the end of years 11 through 40 Contract 3 $1,000,000 immediate signing bonus $500,000 at the end of year 1 $1,000,000 at the end of year 2 $1,500,000 at the end of year 3 $2,500,000 at the end of year 4 As part of the third offer hhe was also promised a $200,000 bonus for any year in which he was selected to play in the Pro Bowl All Star game. his agent figured there was a 25% probability of that occuring in each of the next 4 years.Moonlight Industries just signed a sales contract with a new customer. JK will receive annual payments in the amount of $50,000, $96,000, $123,000, and $138,000 at the end of Years 1 to 4, respectively. What is this contract worth at the end of Year 4 if the firm earns 3.75 percent on its savings? Can the excel and calculator solution be provided?
- Football coach Ira Blooper has just been fired as head coach at a large university. His buyout amount is $7.5 million, and Blooper will be repaid (as per his contract) in monthly installments over the next four years. If the interest rate is 1% per month, how much will Blooper receive each month?A professional baseball player signed a 5-year contract with the last year’s World Series Champion. The contract says that the player is being paid a total compensation of $5 million in present value. The player will receive a signing bonus of $1.5 million now, and the remaining compensation will be divided equally into 5 annual salaries of $1 million each with the first salary paid a year from now. What is the implicit interest rate per year?Roger Sterling has decided to buy an ad agency and is going to finance the purchase with seller financing-that is, a loan from the current owners of the agency. The loan will be for 2,100,000 financed at an APR of 8 percent compounded monthly. This loan will be paid off over 7 years with end o month payments, along with a 600,000 balloon payment at the end of year 7. That is, the 2.1 million loan will be paid off with monthly payments, and there will also be a final payment of 600,000 at the end of the final month. How much will the monthly payments be?