Two rival football fans have made the following wager: if one fan's college football team wins the conference title outright, the other fan will donate $1,000 to the winning school. Both schools have had relatively unsuccessful teams, but are improving each season. If the two fans must put up their potential donation today and the discount rate is 8% for the funds, what is the required upfront deposit if we expect a team to win the conference title in 4 years? 12years? 20years?
Two rival football fans have made the following wager: if one fan's college football team wins the conference title outright, the other fan will donate $1,000 to the winning school. Both schools have had relatively unsuccessful teams, but are improving each season. If the two fans must put up their potential donation today and the discount rate is 8% for the funds, what is the required upfront deposit if we expect a team to win the conference title in 4 years? 12years? 20years?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Two rival football fans have made the following wager: if one fan's college football team wins the conference title outright, the other fan will donate
$1,000
to the winning school. Both schools have had relatively unsuccessful teams, but are improving each season. If the two fans must put up their potential donation today and the discount rate is 8% for the funds, what is the required upfront deposit if we expect a team to win the conference title in 4 years?
12years?
20years?
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