Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter Review and Self-Test Problems
Present Values with Multiple Cash Flows A first-round draft choice quarterback has been signed to a three-year,
$10 million contract. The details provide for an immediate cash bonus of $1 million. The player is to receive $2
million 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 percent discount rate, is this package worth $10 million? How much is it worth? (See
Problem 1.)
5.1
5.2
Future Value with Multiple Cash Flows You plan to make a series of deposits in an interest-bearing account.
You will deposit $1,000 today, $2,000 in two years, and $8,000 in five years. If you withdraw $3,000 in three
years and $5,000 in seven years, how much will you have after eight years if the interest rate is 9 percent? What
is the present value of these cash flows? (See Problem 3.)
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Transcribed Image Text:Chapter Review and Self-Test Problems Present Values with Multiple Cash Flows A first-round draft choice quarterback has been signed to a three-year, $10 million contract. The details provide for an immediate cash bonus of $1 million. The player is to receive $2 million 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 percent discount rate, is this package worth $10 million? How much is it worth? (See Problem 1.) 5.1 5.2 Future Value with Multiple Cash Flows You plan to make a series of deposits in an interest-bearing account. You will deposit $1,000 today, $2,000 in two years, and $8,000 in five years. If you withdraw $3,000 in three years and $5,000 in seven years, how much will you have after eight years if the interest rate is 9 percent? What is the present value of these cash flows? (See Problem 3.)
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