PLEASE HELP You have a sub-contracting job with a local manufacturing firm.

[pennstatefan73]

PLEASE HELP/

question;

You have a sub-contracting job with a local manufacturing firm. Your agreement calls for annual payments of $57,500 for the next three years. At a discount rate of 9%, what is this job worth to you today?

 

[Deleted member 4993]

PLEASE HELP/

question;

You have a sub-contracting job with a local manufacturing firm. Your agreement calls for annual payments of $57,500 for the next three years. At a discount rate of 9%, what is this job worth to you today?

What are your thoughts?

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Hint: Use the equation for "Present Value" calculation.

 

[stapel]

You have a sub-contracting job with a local manufacturing firm. Your agreement calls for annual payments of $57,500 for the next three years. At a discount rate of 9%, what is this job worth to you today?

Are you getting the annual payments at the start of each year, or at the end? (I suspect the end, if they haven't stated otherwise.) Are you supposed to account for interest on the payments received?

Either way, how much would you have to invest now, at the state interest rate, in order to end up, at the end of the three years, with the same amount as the payments would give you?

Also, what are the financial assumptions? Are you using the Bankers Rule? Are you assuming simple annual interest, or compounded interest? If the latter, what is the type of compounding?

Please be complete. Thank you!