Module $3$: Discounted Cash Flow Valuation

Homework assignment $(40$ points$)$

Show your work, not just your answers. IF you only

list answers, you will only receive partial credit.

Upon completion, of discussing Module $3$answer the

following question.

Suppose two athletes each sign a $10-$year contract

for $$80$ million. In one case, we're told that the $$80$

million will be paid in $10$ equal installments

$($Athlete A$).$ In the other case, we're told that the

$$80$ million will be paid in $10$ installments, but the

installments will increase by $5\%$ per year $($Athlete

B$).$ Who has the better deal? $(10$ points$)$ Show

your work

Based on your answer explain why that particular

athlete has the better deal? $(10$ points$).$

What is the present value of $$6,811$ to be received in one

year if the discount rate is $6\mathrm{.}5$ percent? $(10$ points$)$

If you made a $$74,000$ deposit in each bank, how much

more money would you earn from your Second City Bank

account at the end of $8$ years at a rate of $8\%?(10$ points$)$