An athlete was offered the following contract for the next three years: The athlete would rather have his salary in equal amounts at the END of each of the three years.If the discount rate for the athlete is 10%,what yearly amount would she consider EQUIVALENT to the offered contract?

Question

An athlete was offered the following contract for the next three years:  The athlete would rather have his salary in equal amounts at the END of each of the three years.If the discount rate for the athlete is 10%,what yearly amount would she consider EQUIVALENT to the offered contract?

Quizplus · Accepted Answer

PV = $5/(1.10)+$7/(1.10)^2+$9/(1.10)^3 = $17.09
Annuity:
n=3,r=10%,PV=$17.09,PMT=?,FV=0
PMT = $6.87

An Athlete Was Offered the Following Contract for the Next