The four actors below have just signed a contract to star in a dramatic movie about relationships among hospital doctors. Filming is expected to take two years to complete. Each person signs independent contracts today with the following terms:

Contract Terms

Contract Amount Payment Date

Derek $ $460,0002$ years

Isabel $500,0003$ years

Meredith $395,000$ Today

George $360,0001$ year

Required:

$1-$a$.$ Assuming an annual discount rate of $8\%,$ calculate the present value of the contract amount. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ and PVA of $$1)$

$1-$b$.$ Which of the four actors is actually being paid the most?

Answer rating: 100% (QA)

Present Value Analysis of Actor Contracts Discount Rate 8 per year Calculation... View the full answer