Finance $215$ October $2$ HW

Please write your complete name on each page and staple or paperclip pages.

MLB star Shohei Ohtani recently received a $10-$year $$700$ million dollar contract.

According to press accounts, $$680$ million of this is deferred. Assume Ohtani will

receive $$2$ million a year in years $1$ through $10.$ Also assume he receives the $$680$

million deferral in year $10.($So in year $10$ he receives a total of $$682$ million$).$

Further assume Ohtani can earn $7\%$ on his investments. What is the present value

of his contract?

For full credit you must do this in Excel and hand in print out.

Read the following story;

What One ETF From the Dot$-$Com Era Can Tell Us About Tech Investing Now $-$ WSJ

An investor who invested $$1000$ in $1999,$ and reinvested all dividends, would have

had $$9,394$ at the end of $2023.$ For simplicity, assume the holding period was

exactly $25$ years. What was the investor's annual percent return? Present your

answer to four decimal places. $($e$.$g$.5\mathrm{.}25\%$ would be $\mathrm{.}0525)$

The next ten year of earning for Johnson and Johnson $($in millions$)$ are:

Use a discount rate of $10\%.$ What is the present value of this stream of earnings

$($today is year $0)?($You will need to discount each cash flow back separately, then

sum them.$)$

For full credit you must do this in Excel and hand in print out.

Assume a $3\%$ interest rate. What is the total present value of five $$120$ cash

flows paid in each of the years $1$ to $5?$ Use the Excel PV function. $($Report your

answer as a positive number.$)$

Use calculator. You invest $$100$ in a savings account today. In five years this has

grown to $$148.$ What was your annual rate of return. $($Hint: you can check your

answer by calculating $100(1+r{)}^5$ and seeing if you get $$148.)$ Present your answer

to four decimal places. $($e$.$g$.5\mathrm{.}25\%$ would be $\mathrm{.}0525)$