S. Ken Flint retired as president of Colour Tile Company, but he is currently on a consulting contract for $59,000 per year for the next 12 years. (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole doller.) a. If Mt. Flint's opportunity cost (potential return) is 11 percent, what is the present value of his consulting contract? Present value $ 383049 b. Assuming Mr. Flint will not retire for two more years and will not start to receive his 12 payments until the end of the third year, what would be the value of his deferred annuity? Present value $310891 c. Recalculate part a assuming the contract stipulates that payments are to be made at the beginning of each year $ Present value
S. Ken Flint retired as president of Colour Tile Company, but he is currently on a consulting contract for $59,000 per year for the next 12 years. (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole doller.) a. If Mt. Flint's opportunity cost (potential return) is 11 percent, what is the present value of his consulting contract? Present value $ 383049 b. Assuming Mr. Flint will not retire for two more years and will not start to receive his 12 payments until the end of the third year, what would be the value of his deferred annuity? Present value $310891 c. Recalculate part a assuming the contract stipulates that payments are to be made at the beginning of each year $ Present value
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...
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