The question is missing the requirement. The complete question is,
A famous quarterback just signed a $15 million contract providing $3 million a year for 5 years. A less famous receiver signed a $14 million 5-year contract providing $4 million now and $2 million a year for 5 years. Who is better paid? The interest rate is 10%.
Answer:
The less famous receiver is better paid.
Explanation:
To calculate who is better paid, we need to calculate the present value of the amount the famous quarterback and less famous receiver will receive.
The present value is the sum of future cash flows discounted back to today's terms using the discount rate or interest rate.
<u>PV of $15m for famous quarterback:</u>
The famous quarter back will receive the 15 million in equal payments for five years. We consider the payments are received at the end of period. We calculate the 5 year discount factor for such annuity at 10%.
- Discount factor = (1 - (1 + 10%)^-5) / 10% = 3.79079
- The discount factor is calculated using the simple formula for Present value of ordinary annuity
- The PV = $3 million * 3.79079 = $11.37237 million
<u>PV of $14 million for less famous receiver:</u>
The less famous receiver is receiving $4 million today which are worth exactly the same that is $4 million. Apart from that, the remaining payments of $10 million is received in ordinary annuity of $2 million a year. We calculate the PV of $4 million today and $2 million annuity for five years to calculate the value of $14 million today
- The annuity discount factor is same as the interest rate and time period is same.
- The PV = $4 million + $2 million * 3.79079 = $11.58158 million
$0.05m + $50>55
0.05 per minute plus $50 per month for the plan less than $55
Answer:
9.411 %
Explanation:
COst of preferred stock can be calculated by dividing the dividend by the market price per share
DATA
Dividend rate = 8%
Par value = $100
Dividend = 8% x $100 = $8
Market price = $85
Solution
Cost of Preferred stock = Dividend / Market price
Cost of Preferred stock= 8% ×$100/$85
Cost of Preferred stock= 9.411 %
I believe the correct answer to your question would be 10 to 14 years for the earth to get 0.1% heavier.
Hope I could help! :)
9.38%; 10.25%
Explanation:
The annual rate rate of return is based on the amount of money earned or expended at year-end and is split at the start of the year into an initial investment. The annual returns or cumulative annual rate is also related to as this form.
For example, if you make monthly payments, divide by 12. 2. Multiply by the remaining balance of your mortgage which will be the entire principal for your first deposit. You must incur an excess amount by the amount of the value of your interest rate.
