Reference no: EM132849999
Questions -
Q1. Petrogazz convinced Mae Luna to play for their volleyball franchise for 3 seasons. They offered the player $1,000,000 in the 1st year, $2,500,000 in the 2nd year, and $3,000,000 in the 3rd year. Assuming end of year payments of the proceeds of the contract, how will we find the value of his contract today if Mae Luna has a discount rate of 12%, compounding semi-annually?
Q2. Among the following investment opportunities (A, B, C) which are all maturing at the end of two years and requires a 6% rate of return, what would you choose? Explain.
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Investment
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Compounding
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Future Value
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A
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Annually
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$1,123,600
|
|
B
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Monthly
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1,127,159.78
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C
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Quarterly
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1,126,492.59
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Q3. Jen Law Firm is evaluating a project that must produce a revenue of $4,600 in the 1st year, $5,200 in the 2nd year, $5,900 in the 3rd year, and $5,700 in the 4th year. The firm receives each cash flow at the end of each year. If the required return of Jen Law Firm is 12%, compounding semi-annually, how much will be the future value of these cash flows at the end of the 4th year?