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Coach Saban has signed a contract extension that would pay him $8,500,000 in salary for 9...

Coach Saban has signed a contract extension that would pay him $8,500,000 in salary for 9 years. What is the present value and the present value factor for this annuity assuming a 6% discount rate?

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Expert Solution

Present Value of an Annuity

​where:P=Present value of an annuity

PMT= Amount of annuity payment

r=Interest rate ordiscount rate

n=Number of periods

1-(1/((1+.06)9)/.06

=8500000* (.41/.06)

=$5808333

Present Value=FV/(1+r)n

​where:FV=Future Valuer=Rate of returnn=Number of periods​

5808333/(1+.06)9

5808333*1.69

=$9816083

jeff jeffy answered 2 years ago
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