In 2011, a running back signed a contract worth $67.4 million. The contract call

Question

In 2011, a running back signed a contract worth $67.4 million. The contract called for $11.5 million immediately and a salary of $3.8 million in 2011, $10.1 million in 2012, $11.5 million in 2013, $9.7 million in 2014 and 2015, and $11.1 million in 2016. Required: If the appropriate interest rate is 8 percent, what kind of deal did the running back scamper off with? Assume ail payments other than the first $11.5 million are paid at the end of the year. (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).) Present value

Explanation / Answer

Year Cashflows PVF@8% Present value ( Figures in $ millions) 2011 11.5 1.000                                                                  11.50 2011 3.8 0.926                                                                     3.52 2012 10.1 0.857                                                                     8.66 2013 11.5 0.794                                                                     9.13 2014 9.7 0.735                                                                     7.13 2015 9.7 0.681                                                                     6.60 2016 11.1 0.630                                                                     6.99 Present value                                                                  53.53

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.