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In: Accounting

The four actors below have just signed a contract to star in a dramatic movie about...

The four actors below have just signed a contract to star in a dramatic movie about relationships among hospital doctors. Each person signs independent contracts with the following terms:

Contract Terms
Contract Amount Payment Date
Derek $ 580,000 2 years
Isabel 620,000 3 years
Meredith 490,000 Today
George 480,000 1 year

Required:
1-a. Assuming an annual discount rate of 8%, calculate the present value of the contract amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.)

Solutions

Expert Solution

Contract Terms
Contract Amount Payment Date PV Factor @ 8% Present Value
  Derek                   5,80,000 2 years 0.85734     4,97,257.20
  Isabel                   6,20,000 3 years 0.79383     4,92,174.60
  Meredith                   4,90,000 Today 1     4,90,000.00
  George                   4,80,000 1 year                 0.92593     4,44,444.00

ekkarill92 answered 2 years ago
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