Baller has been offered the new contracts

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Reference no: EM131818289

A Baller has been offered the following new contracts. All are guaranteed. If the discount rate is 6% how much is each worth today? Which do you think is the best option? Why?

To earn full credit, you need to show all of your work and it needs to be clear and readable.

1. A yearly contract for $20 million per year for each of the next 4 years.

2. A yearly contract for $10 million per year for each of the next 8 years.

3 A yearly contract for $8 million the first year which is guaranteed to increase by 3% per year for the next 8 years.

4. A back-loaded contract for $90 million paid at the end of 5 years.

5. A back-loaded contract for $100 million paid at the end of 8 years.

6. A front-loaded contract for $65 million paid today.

Reference no: EM131818289

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