Question

Captain America gets an offer for the next movie and wants you to analyze whether it's a good deal. Captain America will receive $200,000 per year starting on his 35th birthday and ending on his 70th birthday (his last payments will be on his 70th birthday). He then will receive $400,000 every six months starting six months after the last payments of $200,000 and ending on his 89th birthday. He will also receive $16,000,000 on his 90th birthday and another $16,000,000 on his 95th birthday.

Assuming he will be around until the end of the investments and celebrating his 30th birthday today and he has a 10% (semiannual). Use the PV concept. What is his offer?

Please use business calculator, no formulas or charts. (State what N, I, PMT, PV, FV) Please use timeline. Thanks!!

Answer 1

Present value of Captain America’s offer is $ 8,504,906.4 that he would receive in 60 years with a discount rate of 10% semiannual.

Period	PMT	PV (Discounted cash flows)
1	200,000.0	190,476.2	(200,000)/(1+.1/2)^1
2	200,000.0	181,405.9	(200,000)/(1+.1/2)^2
3	200,000.0	172,767.5
4	200,000.0	164,540.5
5	200,000.0	156,705.2
6	200,000.0	149,243.1
7	200,000.0	142,136.3
8	200,000.0	135,367.9
9	200,000.0	128,921.8
10	200,000.0	122,782.7
11	200,000.0	116,935.9
12	200,000.0	111,367.5
13	200,000.0	106,064.3
14	200,000.0	101,013.6
15	200,000.0	96,203.4
16	200,000.0	91,622.3
17	200,000.0	87,259.3
18	200,000.0	83,104.1
19	200,000.0	79,146.8
20	200,000.0	75,377.9
21	200,000.0	71,788.5
22	200,000.0	68,370.0
23	200,000.0	65,114.3
24	200,000.0	62,013.6
25	200,000.0	59,060.6
26	200,000.0	56,248.1
27	200,000.0	53,569.7
28	200,000.0	51,018.7
29	200,000.0	48,589.3
30	200,000.0	46,275.5
31	200,000.0	44,071.9
32	200,000.0	41,973.2
33	200,000.0	39,974.5
34	200,000.0	38,071.0
35	200,000.0	36,258.1
36	200,000.0	34,531.5
37	800,000.0	263,097.0	800000/(1+.1/2)^37*2
38	800,000.0	250,568.6
39	800,000.0	238,636.7
40	800,000.0	227,273.1
41	800,000.0	216,450.6
42	800,000.0	206,143.4
43	800,000.0	196,327.0
44	800,000.0	186,978.1
45	800,000.0	178,074.4
46	800,000.0	169,594.7
47	800,000.0	161,518.7
48	800,000.0	153,827.4
49	800,000.0	146,502.3
50	800,000.0	139,526.0
51	800,000.0	132,881.9
52	800,000.0	126,554.2
53	800,000.0	120,527.8
54	800,000.0	114,788.4
55	800,000.0	109,322.2
56	16,000,000.0	1,041,164.2	16000000/(1+.1/2)^56
57	-
58	-
59	-
60	-
61	16,000,000.0	815,779.4	16000000/(1+.1/2)^61
		8,504,906.4	Sum of all discounted cash flows