Reference no: EM132849999
Questions -
Q1. Petrogazz convinced Mae Luna to play for their volleyball franchise for 3 seasons. They offered the player $1,000,000 in the 1st year, $2,500,000 in the 2nd year, and $3,000,000 in the 3rd year. Assuming end of year payments of the proceeds of the contract, how will we find the value of his contract today if Mae Luna has a discount rate of 12%, compounding semi-annually?
Q2. Among the following investment opportunities (A, B, C) which are all maturing at the end of two years and requires a 6% rate of return, what would you choose? Explain.
Investment
|
Compounding
|
Future Value
|
A
|
Annually
|
$1,123,600
|
B
|
Monthly
|
1,127,159.78
|
C
|
Quarterly
|
1,126,492.59
|
Q3. Jen Law Firm is evaluating a project that must produce a revenue of $4,600 in the 1st year, $5,200 in the 2nd year, $5,900 in the 3rd year, and $5,700 in the 4th year. The firm receives each cash flow at the end of each year. If the required return of Jen Law Firm is 12%, compounding semi-annually, how much will be the future value of these cash flows at the end of the 4th year?