A famous athlete is awarded a $9 million contract that stipulates equal payments to be made monthly over a period of five years. To determine what lump sum has the same value as the contract today, you would need to use:

Question

Quizplus · Accepted Answer

To determine the lump sum equivalent of equal monthly payments over a period, present value factors of an annuity are used. This accounts for the time value of money over the payment period, converting a series of future payments into a single present value.

A Famous Athlete Is Awarded a $9 Million Contract That