Question

In: Finance

QUESTION 96 A baseball player is offered a contract that will pay $1,455,382 per year for...

QUESTION 96

  1. A baseball player is offered a contract that will pay $1,455,382 per year for 5 years, followed by $2,113,877 per year for 3 years, followed by $2,633,054 per year for 7 years. All contract payments are paid at the end of the year. If the player's required rate of return is 5.7%, how much is this contract worth? State your answer to the nearest whole dollar.

QUESTION 97

  1. A company is considering the purchase of a new production line that it has estimated will generate the following annual cash flows:  $5,710,498 per year for 8 years, followed by $7,672,287 per year for 2 years, followed by $3,519,326 per year for 15 years. All cash flows will be received at the end of the year. If the company's required rate of return is 12.4%, what is the maximum price at which the company will purchase this new line? State your answer to the nearest whole dollar.

QUESTION 98

  1. Assume that you will receive $8,766 per year for 4 years, followed by $4,590 per year for 8 years, followed by $7,686 per year for 3 years. All cash flows are to be received at the end of the year. If the required rate of return is 14.9%, what is the present value of these cash flows? State your answer to the nearest whole dollar.

QUESTION 99

  1. What is the present value of a 28-year ordinary annuity with annual payments of $118,60480,000, evaluated at a 7.1 percent interest rate? State your answer to the nearest whole dollar.

QUESTION 100

  1. What is the effective annual interest rate on an investment that quotes a nominal annual rate of 8.79% compounded quarterly? State your answer as a percentage to 2 decimal places

Solutions

Expert Solution


Related Solutions

A baseball player is offered a 5-year contract that pays him the following amounts:
A baseball player is offered a 5-year contract that pays him the following amounts:Year 1: $1.10 millionYear 2: $1.52 millionYear 3: $2.14 millionYear 4: $2.63 millionYear 5: $3.41 millionUnder the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.85 million more than that which has been offered. Moreover, the player wants to receive...
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1:...
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1: $1.05 million Year 2: $1.81 million Year 3: $2.07 million Year 4: $2.58 million Year 5: $3.35 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.92 million more than that which has been offered....
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1:...
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1: $1.41 million Year 2: $1.67 million Year 3: $2.12 million Year 4: $2.79 million Year 5: $3.46 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.70 million more than that which has been offered....
A professional baseball player just signed a contract to pitch for the Houston Astros. The contract...
A professional baseball player just signed a contract to pitch for the Houston Astros. The contract specified that the player would earn $1,000,000.if he were healthy and could pitch. The contract also specified that he would earn $0. if he became I injured and unable to putch. There is a 10% (.1 probability) chance that the pitcher would become injured. 1). What is the Expected Utility for the Beneficiary( Baseball Pitcher) with insurance? 2). What is the Actuarially Fair price...
In 2015, a baseball player signed a contract reported to be worth $98.5 million. The contract...
In 2015, a baseball player signed a contract reported to be worth $98.5 million. The contract was to be paid as $14.7 million in 2015, $14.9 million in 2016, $17.1 million in 2017, $17.2 million in 2018, $17.2 million in 2019, and $17.4 million in 2020. If the appropriate interest rate is 9 percent, what kind of deal did the player snag? Assume all payments are paid at the end of the year. (Enter your answer in dollars, not millions...
A professional baseball player signs a contract for $158 million to play with a team for...
A professional baseball player signs a contract for $158 million to play with a team for 7 years. He and his team agree that the contract will be spread out so that the player is paid beyond the 7 years. The payment plan for the contract is as follows: $19 million each year for years 1 through 7. $3.1 million each year for the next 8 years. $1.4 million each year for the next 8 years. You should assume that...
The baseball player Alex Rodriguez signed a contract for a stated value of $275 mil in...
The baseball player Alex Rodriguez signed a contract for a stated value of $275 mil in 2007. The amount actually consisted of $2 mil immediately, along with $28 mil in the first year and the remaining $245 mil to be paid evenly over the years 2009 through 2017. How much was the contract really worth in 2007 ? Assume an interest rate of 5%.
you are offered an annuity that will pay you $200,000 once per year, at the end...
you are offered an annuity that will pay you $200,000 once per year, at the end of the year, for 25 years. the first payment will arrive one year from now. the last payment will arrive twenty five years from now. suppose your annual discount rate i=17.25%, how much are you willing to pay for this annuity? ( this is the same as the present value of an annuity)
You are offered an annuity investment that will pay you $ 25,000 per year for 10...
You are offered an annuity investment that will pay you $ 25,000 per year for 10 years     beginning in 20 years. These payments will be made at the beginning of each year and your discount rate is expected to be 8%. You will need to make payments at the end of each year for the next 20 years (also at 8%) in order to receive the annuity investment. What is the present value of the annuity investment as of...
10. You are offered an annuity that will pay you $200,000 once per year, at the...
10. You are offered an annuity that will pay you $200,000 once per year, at the end of the year, for 25 years. The first payment will arrive one year from now. The last payment will arrive twenty five years from now. Suppose your annual discount rate is ?? = 5.25%, how much are you willing to pay for this annuity? (hint: this is the same as the present value of an annuity.) 11. You would like to develop an...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT