How much is each worth today

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Reference no: EM131818085

A Baller has been offered the following new contracts. All are guaranteed. If the discount rate is 6% how much is each worth today? Which do you think is the best option? Why?

Please clearly show all work done to answer problem.

1. A yearly contract for $20 million per year for each of the next 4 years.

2. A yearly contract for $10 million per year for each of the next 8 years.

3. A yearly contract for $8 million the first year which is guaranteed to increase by 3% per year for the next 8 years.

4. A back-loaded contract for $90 million paid at the end of 5 years.

5. A back-loaded contract for $100 million paid at the end of 8 years.

6. A front-loaded contract for $65 million paid today.

Reference no: EM131818085

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