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marshall27 [118]
3 years ago
15

Suppose 2 athletes sign 10-year contracts for $80 million. In one case, we're told that the $80 million will be paid in 10 equal

instalments. In the other case, we're told that the $80 million will be paid in 10 instalments, but the instalments will increase by 5% per year. Who got a better deal and why?
Business
1 answer:
maxonik [38]3 years ago
4 0

Answer:

player 2 is signing a better contract

Explanation:

the present value of an annuity (player 1) = annual payment x annuity factor

assuming that the interest rate is 10%

present value = $10 million x 6.1446 (PV annuity factor, 10%, 10 periods) = $61.446 million

player 2's contract

the present value of a growing annuity = [payment / (i - g)] x {1 - [(1 + g) / (1 + i)]ⁿ} = [$10 / (10% - 5%)] x {1 - [(1 + 5%) / (1 + 10%)]¹⁰} = $200 x 0.372 = $74.398 million

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Answer:

$24,25

Explanation:

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3 years ago
Ceteris paribus, based on the aggregate demand curve, if the price level _______ the quantity of real output _______ increases.
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The answer to your question Roxannecalixto is decreases and produced.
4 0
3 years ago
During January 2016, Wells Corporation purchased $200,000 of inventory; they paid one-fourth in cash, and signed a note for the
ivanzaharov [21]

Answer:

Inventory                        $200,000    

Cash                                                      $50,000

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Data provided in the question:

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Now,

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