a. A first-round draft choice goalkeeper has been signed to a three-year, $10 million contract. The details provide for an immediate cash bonus of $1million. The player is $2million in salary at the end of the first year, $3 million the next, and 4 million at the end of the last year. Assuming a 10% discount rate, is this package worth $10 million? How much is it worth?
.a. A first-round draft choice goalkeeper has been signed to a three-year, $10 million contract. The details provide for an immediate cash bonus of $1million. The player is $2million in salary at the end of the first year, $3 million the next, and 4 million at the end of the last year. Assuming a 10% discount rate, is this package worth $10 million? How much is it worth?
.b Suppose a business takes out a GHC5000, 5-year loan at 9%. If the loan agreement calls for the borrower to pay the interest on the loan balance each year and to reduce the loan balance each year by GHC 1000, what would the loan repayment schedule look like?
.c. Example: after carefully going over your budget, you have determined you can afford to pay GHC632 per month toward a new sports car. You call up your local bank and find out that the going rate is 1% per month for 48 months. How much can you borrow?
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