A professional rugby league player is offered a bonus of $150 000 if he completes a five year playing contract with an NRL club.If money is worth 7 per cent to him what is this bonus worth today?

Question

Quizplus · Accepted Answer

This question requires us to calculate the present value of the bonus using the formula PV = FV / (1+r)^n, where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years. Substituting in the given variables, we get PV = 150,000 / (1+0.07)^5 = $106,947.93, which is closest to answer choice (A). Therefore, the best choice is (A).

A Professional Rugby League Player Is Offered a Bonus of $150