Question: (Present value of a complex stream) Don Draper has signed a contract that will pay him $70,000 at the beginning of each year for the

(Present value of a complex stream) Don Draper has signed a contract that will pay him $70,000 at the beginning of each year for the next 5 years, plus an additional $120,000 at the end of year 5. If 11 percent is the appropriate discount rate, what is the present value of this contract?

A. What is the present value of $70,000 at the beginning of each year for the next 5 years if the discount rate is 11 percent?

B. What is the present value of $120,000 at the end of year 5 if the discount rate is 11 percent?

C. What is the total present value of this contract?

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