Question

how do i do this on betta ii plus calculator

Problem 5 (15 pts): The Bachelor and the Bachelorette have hired you to determine who has the best endorsement offer. The Bachelor has been offered the job as a spokesperson for the National I Like Myse W Foundation as they figure that they do not have to offer any advice for him to do the jo The NILMF will pay him $2,000 per month starting ten years from today for a total of 120 months. He then will receive $40,000 per year for six years with the first paymen $40,000 occurring one month after the last payment of $2,000. He also will receive $70,000 every year for five years with the first of these coming six months from today The Bachelorette has been offered a job as the spokesperson for the Do You Believe I Get Paid For What I Do Foundation. The DYBIGPFWIDF will pay her $30,000 per y for twenty years with the first of these coming today. She will also receive $400,000 months after her last payment of $30,000. Finally she will receive $500,000 fifty year from today - she was worried that she would not have enough for a 75th birthday gift f herself. They want to know who has the best offer in today's dollars. Assume a 9% (compounded monthly) rate for your analysis. Show all of your work and give a total value for each of their offers.

Answer 1

As per instructions given, all calculations have been made using BA 2 Plus Calculator

Bachelor:

1. $2000 per month starting 10 years from today for 120 months:

Let us assume amounts are received at the beginning of every month.

On BA 2 Plus, enter:

N =119
I/Y = 9
PMT=2000

CPT PV = 22,221.44053
To this add $2000 to be recieved at the beginning of the first month
Total amount = 24,221.44053

This is the amount 10 years from now. To discount it to the present, we must use the effective annual yield.

Effective annual yield = ((1+(0.09/12)¹²)-1)*100 = 9.380689767%

On BA 2 Plus:
N = 10
I/Y = 9.380689767
FV = 24,221.44053
CPT PV = 9,880.829173

2. $40,000 per year for 6 years:

On BA 2 plus:

N=6
I/Y = 9.380689767
PMT = 40,000
CPT PV = 177,418.2395

This is the amount 16 years from today. We must discount it to the present.

On BA 2 plus:

N = 16
I/Y = 9.380689767
FV = 177,418.2395
CPT PV = 42,261.77577

3. $70,000 per year for 5 years starting 6 months from today:

On BA 2 Plus,
N = 5
PMT = 70,000
I/Y= 9.380689767
CPT PV = 269,607.2648

This amount is 6 months from today. We must discount it

On BA 2 plus:

N= 0.5
I/Y=9.380689767
FV = 269,607.2648
CPT PV = 257,787.1479

Total present values of money = 309,929.7528

Bachelorette:

1. $30000 per year starting today for 20 years:

Let us assume amounts are received at the beginning of every year.

On BA 2 Plus, enter:

N =19
I/Y = 9.380689767
PMT= 30,000
CPT PV = 261,593.711

To this add $30,000 to be recieved at the beginning of the first year
Total amount = 291,593.711

2. $400,000 six months after 20 years from today:

On BA 2 plus:

N= 20.5
I/Y = 9.380689767
FV = 400,000
CPT PV = 63,346.79032

3. $500,000, fifty years from today

On BA 2 Plus,
N = 50
PMT = 500,000
I/Y= 9.380689767
CPT PV = 5,648.551808

Total present values of money = 360,589.0531

Bachelorette's offer is better in terms of today's dollars