Solutions to Chapter 1

20. The PV for the quarterback is the present value of a 5-year, $3 million annuity: $3 million ( annuity factor(10%, 5 years) = The receiver gets $4 million now plus a 5-year, $2 million annuity. The present value of the annuity is: With the $4 million immediate payment, the receiver’s contract is worth: $4 million + $7.58 million = $11.58 ... ................
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