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liberstina [14]
3 years ago
9

A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 10%. He has been offered three possible 4-ye

ar contracts. Payments are guaranteed, and they would be made at the end of each year. Terms of each contract are as follows: 1 2 3 4 Contract 1 $3,000,000 $3,000,000 $3,000,000 $3,000,000 Contract 2 $2,500,000 $3,000,000 $4,000,000 $5,000,000 Contract 3 $7,000,000 $1,500,000 $1,500,000 $1,500,000 As his advisor, which contract would you recommend that he accept?
Business
1 answer:
Sati [7]3 years ago
6 0

Answer:

Contract 3 has the higher present value. Therefore, it is the most convinient.

Explanation:

Giving the following information:

His opportunity cost is 10%.

Contract 1

$3,000,000

$3,000,000

$3,000,000

$3,000,000

Contract 2

$2,500,000

$3,000,000

$4,000,000

$5,000,000

Contract 3

$7,000,000

$1,500,000

$1,500,000

$1,500,000

We need to find the present value of each contract to compare.

PV= CF/(1+i)^

CF= cash flow

Contract 1:

PV= 3,000,000/(1.10) + 3,000,000/(1.10^2) + 3,000,000/(1.10^3) + 3,000,000/(1.10^4)

PV= $9,509,596.34

Contract 2:

PV= $11,172,392.6

Contract 3:

PV= $9,754,798.17

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Explanation:

6 0
3 years ago
Which of the following is not common to all investments?
MrRa [10]

Answer:

Option D is the correct answer

Explanation:

Investors are typically expected to part with their funds today in expectation for a future amount,hence the funds so invested are invested for speculative reasons.

Owners are given the option of future payments at redemption of the investments while some investments can be divested before maturity.

Future payments are naturally risky because investment is like two sides of a coin, it either has a positive or negative outcome such loss of the entire invested sum.

Not all investments pay positive rate of interest, the US bank deposit interest was negative during the global meltdown in 2009.

5 0
3 years ago
Suppose that real gdp per capita in italy is $36,000. If real gdp per capita is growing at a rate of 3. 6% per year. How many ye
soldier1979 [14.2K]

Suppose that real GDP per capita in Italy is $36,000. If real GDP per capita is growing at a rate of 3. 6% per year. How many years will it take for real GDP per capita to reach $72,000?

The correct answer is 20 years.

What is GDP per capita?

GDP per capita is calculated by dividing the total gross value contributed by all producers who are residents of the economy by the mid-year population, plus any product taxes (less subsidies) that are not taken into account when valuing output.

In the given case, the real GDP of Italy will be doubled in 20 years which is determined by rule 72.

So, 20 years it will take for real GDP per capita to reach $72,000.

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7 0
2 years ago
A project is expected to generate annual revenues of $132,100, with variable costs of $80,200, and fixed costs of $20,700. The a
Ludmilka [50]

Answer:

$21,943

Explanation:

Calculation to determine the annual operating cash flow

Using this formula

Operating Cash Flow =(Annual Revenue-Variable costs - Fixed costs)×(1-Tax rate)+( Annual depreciation×Tax rate )

Let plug in the formula

Operating Cash Flow =[ ($132,100 - $80,200 - $20,700) x (1 - 0.35)]+ ($4,750 x 0.35)

Operating Cash Flow =

Operating Cash Flow =($31,200×0.65)+$1,663

Operating Cash Flow =$20,280+$1,663

Operating Cash Flow =$21,943

Therefore the annual operating cash flow is $21,943

7 0
3 years ago
Va-15 within how many days must you file a boating accident for an incident that results in property damage only and exceeds $20
k0ka [10]
<span>A written report of the boating accident must be filed within 10 days if the boat or property damage is in excess of $2000 or total boat loss.  Forms can be obtained from the local law enforcement authorities.  </span><span>The boat operator or owner usually completes the form unless she/he is physically unable to do so.</span>
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