Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract for $35,000 per year for the next 10 years a If Mr Moores opportunity cost (potential return) is 10 percent, what is the present value of his consulting contract b Assuming Mr Moore will not reti...

a N IY PV PMT FV 10 10 CPT PV 21505985 35000 0 21505985 b First part Find ...

Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract

Question:

Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract for $35,000 per year for the next 10 years.
a. If Mr. Moore’s (potential return) is 10 percent, what is the present value of his consulting contract?
b. Assuming Mr. Moore will not retire for two more years and will not start to receive his 10 payments until the end of the third year, what would be the value of his deferred annuity?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...