Football player Walter Johnson signs a contract calling for payments of $250,000 per year, to begin 10 years from now and then continue for five more years. To find the present value of this contract, which table or tables should you use?

Question

Quizplus · Accepted Answer

To find the present value of a contract involving payments that start in the future and continue for a certain period, we need to use the present value of an annuity of $1 (to calculate the value of the payments) and the present value of $1 (to account for the time value of money). Therefore, option C is the best choice. The other options involve future values or do not include all the necessary components for this situation.

Football Player Walter Johnson Signs a Contract Calling for Payments