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You have been hired as a financial advisor to Raheel Abbas. He has received two offers...

You have been hired as a financial advisor to Raheel Abbas. He has received two offers for playing professional basketball and wants to select the best offer, based on considerations of money only. Offer A is a Rs.10m (offer for Rs.2m a year for 5 years). Offer B is a Rs.11m (offer of Rs.1m a year for four years and Rs.7m in year 5).
Required: Calculate the present value of each contract by assuming a range of interest rate (8% - 14%). What is your advice regarding the contracts.

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Expert Solution

at 8% Offer B is recommended and at 14% offer A is recommended

jeff jeffy answered 2 years ago
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