Mr. Flint retired as president of the Color Tile Company but is currently on a consulting contract
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Mr. Flint retired as president of the Color Tile Company but is currently on a consulting contract for $45,000 per year for the next 10 years.
a. If Mr. Flint's opportunity cost (potential return) is 10 percent, what is the present value of his consulting contract?
b. Assuming that Mr. Flint 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 CostOpportunity 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,...
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Related Book For
Foundations of Financial Management
ISBN: 978-0077454432
14th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
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