Qu. Suppose Telstra wins a government contract that would pay it the following amounts: $3 million in 2017, $6 million in 2018, $9 million in 2019, $10 million in 2020, $14 million in 2021 and $15 million in 2022. a. Some news reports described Telstra as having signed a $57 million contract with the government. Do you agree that $57 million was the value of this contract? Briefly explain. b. What was the present value of Telstra's contract at the time it was signed, assuming an interest rate of 10 per cent?

Qu. Suppose Telstra wins a government contract that would pay it the following amounts: $3 million in 2017, $6 million in 2018, $9 million in 2019, $10 million in 2020, $14 million in 2021 and $15 million in 2022. a. Some news reports described Telstra as having signed a $57 million contract with the government. Do you agree that $57 million was the value of this contract? Briefly explain. b. What was the present value of Telstra's contract at the time it was signed, assuming an interest rate of 10 per cent?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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