Ami, a professional soccer player, is offered a 5-year contract that pays him the following amounts: Year 1:  $1.2 million Year 2:   1.6 million Year 3:   2.0 million Year 4:   2.4 million Year 5:   2.8 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, Ami asks his agent to negotiate a contract that has a present value of $1 million more than that which has been offered.  Moreover, Ami wants to receive his payments in the form of a 5-year annuity due.  All cash flows are discounted at 8 percent.  If the team were to agree to Ami’s terms, what would be Ami's annual salary (in millions of dollars)? (Answer must have step by step explainations.)

John borrows 10,000 from Tony and agrees to repay the loan with 10 equal annual installments of principal plus interest on the unpaid balance at 5% effective. Immediately after the loan is made, Tony sells the loan to Chris for a price which is equal to the present value of John's future payments calculated at 4%. Calculate the price that Chris will pay for the loan.

Nine months ago, Muriel agreed to pay Aisha $1,900 and $801 on dates 6 and 12 months, respectively, from the date of the agreement. With each payment Muriel agreed to pay interest at the rate of 8 1/2% from the date of the agreement. Muriel failed to make the first payment and now wishes to settle her obligations with a single payment four months from now. What payment should Aisha be willing to accept if money can earn 6 1/2 %? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Payment $

Mr. Ross has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump-sum of $8,000 today, or an annuity of $2,500 a year for the next four years. Which option should Mr. Ross choose if his opportunity cost is 8%?

Ted is an investor and has purchased an IIP for the original price of $984.31767830979. For your convenience, the original information regarding IIP's has been repeated below.   Customers pay $984.31767830979 to buy an IIP. The IIP will pay out $37 at the end of each year for 12 years The IIP will pay out a further single payment of $1,000 after 12 years There are no further payments after this single payment at time 12. a. Suppose Ted holds on to the IIP for the full 12 years. Ignoring time value of money, what is the profit he receives on an IIP? (This can be regarded as profit for tax purposes).

Bridget Jones has a contract in which she will receive the following payments for the next five years: $11,000, $12,000, $13,000, $14,000, and $15,000. She will then receive an annuity of $17,000 a year from the end of the 6th through the end of the 15th year. The appropriate discount rate is 11 percent.  a. What is the present value of all future payments? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Timothy is retiring from his job soon at which time his employer will make the following offer: 1. A lumpsum amount of $200,000 2. A sum of $15,000 at the beginning of each year for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?

Bridget Jones has a contract in which she will receive the following payments for the next five years: $3,000, $4,000, $5,000, $6,000, $7,000. She will then receive an annuity of $10,500 a year from the end of the sixth year through the end of the fifteenth year. The appropriate discount rate is 13 percent. a. What is the present value of all future payments? (Use Excel to arrive at the answer. Round the final answer to the nearest dollar amount.) Present value b. If she is offered a buyout of the contract for $32,000, should she do it? Yes No

Craig decides to purchase a property that has been valued at $480,000. He has $90,000 available as a deposit and will require a mortgage for the remaining amount. The bank offers him a 25 year mortgage at 2% interest. Calculate the total interest he will pay over the life of the loan, assuming he makes monthly payments.

Rob asks his good friend Ted to borrow $5,000 and says he will pay it back to him in 6 months with 8% interest, meaning Rob will owe Ted $5,200 if he pays it back at that time.  Ted asks Rob to "make" a promissory note payable to Ted stating these terms.  Rob does prepare the "note" and signs and gives it to Ted and at the same time Ted gives Rob the $5,000.  Ted in need of money unexpectedly, because he loses his job, contacts his buddy Gullible, and asks him if he will buy the note at a discount of $4,800.  Gullible accepts and stands to make a nice profit when the note owed by Rob comes due. When Gullible gives Ted the $4,800, Ted writes on the note "Without Recourse" and signs his name and tenders the note to Gullible.  Gullible does see Ted write this on the note, but is not sophisticated with regard to legal lingo, and thinks nothing of it.  He therefater gets nervous and thinks maybe he should sell the note himself right away.  He calls his aunt Saviour who says she will buy the…