The four actors below have just signed a contract to star in a dramatic movie ab

Question

The four actors below have just signed a contract to star in a dramatic movie about relationships among hospital doctors Each person signs independent contracts with the following Pa Date $600,000 640,000 500,000 500,000 2 years 2 3 years Isabel Mereditth 1 year Required: 1-a. Assuming an annual discount rate of 9% a culate the present value of the contract amount provided. Round your answers to 2 decimal places.) EVS1 P of $1. E Ao 1. and P Aof $1) (Use appropriate factor s) from 1-b. Which of the four actors is actually being paid the most? O Derek O Isabel O Meredith ^ Type here to search

Explanation / Answer

Answer = 1 (A) CALCULATION OF NET PRESENT VALUE OF THE DEREK Contract Value Year   PVF @ 9% Present value 600000 2                 0.84168 505008.00 CALCULATION OF NET PRESENT VALUE OF THE ISHABEL Contract Value Year   PVF @ 9% Present value 640000 3                 0.77218 494197.43 CALCULATION OF NET PRESENT VALUE OF THE MEREDITH Contract Value Year   PVF @ 9% Present value 500000 1                 1.00000 500000.00 CALCULATION OF NET PRESENT VALUE OF THE GEORGE Contract Value Year   PVF @ 9% Present value 500000 1                 0.91743 458715.60 Present Value Derek 505008.00 Ishabel 494197.43 Meredith 500000.00 George 458715.60 Answer = 1 (B) Answer = The Actor Derek is the paid most =          5,05,008.00

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