Question

A famous quarterback just signed a contract for $10.4 million, providing $2.8 million a year for 4 years. A less famous receiver signed a contract for $9.4 million, providing $3 million now and $2.3 million a year for 4 years. The interest rate is 8%. a. What is the PV of the quarterback's contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million b. What is the PV of the receiver's contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million c. Who is better paid? Quarterback Receiver

Answer 1

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PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins %Cut E AutoSum - A A Wrap Text Calibri 11 General E Copy Fill Merge & Center Insert Delete Format Paste B I U +.0 .00 0 0C Conditional Format Cell Sort & Find & % Format Painter Clear Filter Select Formatting as Table Styles Number Cells Clipboard Font Alignment Styles Editing BG328 BA BB BC BD BE BF BG BH B 312 313 314 2.8 million a year for 4 years Quarterback 315 316 Present value of contract A*(1/r)*(1-(1/(1+r)^n)) 317 2.8*(1/0.08)*(1-(1/(1+0.08)^4)) Present value of contract = 318 319 Present value of contract = 9.273955152 320 a Present value of contract = 9.27 [rounded to 2 decimals] 321 3 million now and 2.3 million a year for 4 years 322 Receiver 323 Present value of contract 3+ 2.3*(1/0.08)*(1-(1/(1+0.08)^4)) 324 - Present value of contract 325 10.61789173 Present value of contract 326 b 10.62 [rounded to 2 decimals] 327 328 c Receiver 329 330 symbols profit margin pv, fv, annuity MORTGAGE EXPO LOAN OPTIONS CAP STRU VALUE LOCK BOX DILUTION DOLLAR COST AVG NPER APR CPI ear FVA pva Rea erences 130% WA 02:18 ENG 04-09-2019