Textbook: Mangerial Economics Applications, Strategy, and Tatics 14th edition I

Question

Textbook: Mangerial Economics Applications, Strategy, and Tatics 14th edition

I need help with solving this Net Present Value problem.

ESPN currently pays the NFL $1.1 billion per year for eight years for the right to exclusively televised Monday night football. What is the net present value of this investment if the parent Disney Company has an opportunity interest rate equal to its cost of capital of 9 percent. Fox and CBS agreed to pay $712 million and $622 million respectively for six years to televise Sunday afternoon NFC games. What was the worth?

Explanation / Answer

sol----------------------$1.1 billion discounted at 9% for 8 years of the following-----

Net present value of $1.1 billion == $ 1.1 billion *5.534819 == $6.08830102609 billion

$712 million and $6122 million discounted at 9 % for 6 years.

$712 million * 4.4859 = $ 3,193, 974, 036.19

$6.22 million *4.4859 = $ 2,790,241,363.07

Reasulting in the total worth for sunday afternoon NFC game =====$5,9 84,215,399.26

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