A famous quarterback has just signed a $12.6 million contract that provides $2.1 million a year for
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Question:
A famous quarterback has just signed a $12.6 million contract that provides $2.1 million a year for 6 years. A less famous catcher signed a 6-year, $11.6 million contract that provides $5 million now and $1.1 million a year for 6 years. The interest rate is 9%. |
| a. | What is the PV of the quarterback's contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) |
| Present value | $ million |
| b. | What is the PV of the receiver's contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) |
| Present value | $ million |
| C. | Who is better paid? | ||||
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Expert Answer:
a To calculate the present value PV of the quarterbacks contract we need to discount each cash flow to its present value using the interest rate of 9 ... View the full answer
Related Book For 
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Posted Date:
