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What would be the value of deferred annuity

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Reference no: EM132498186

Rent Darby retired as president of Clayton Tile Company, but he is currently on a consulting contract for $45,000 per year for the next 10 years.

Question 1: If Mr. Darby's opportunity cost is 10%, what is the present value of his consulting contract?

Question 2: Assuming Mr. Darby will not retire for two more years and will not receive his ten payments until the end of the third year, what would be the value of his deferred annuity?

Question 3: Recalculate part (a) assuming the contract stipulates that payments are to be made at the beginning of each year.

Reference no: EM132498186

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