Question

Present value.  Two rival football fans have made the following​ wager: if one​ fan's college football team wins the conference title​ outright, the other fan will donate ​$2 comma 500 to the winning school. Both schools have had relatively unsuccessful​ teams, but are improving each season. If the two fans must put up their potential donation today and the discount rate is 10​% for the​ funds, what is the required upfront deposit if we expect a team to win the conference title in 4 ​years?  8 ​years?  15 ​years?

Answer 1