4. What happens to the present value of an annuity if the discount rate is...
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4. What happens to the present value of an annuity if the discount rate is increased? What happens to the future value if the discount rate is increased ?
5. If we assume and interest rate of 5% would you rather have $1,000 today or receive $1, 120 in 3 years? Please explain why.
6. Assume that two athletes sign 10 -year contracts that pay out a total of $100 million over the life of the contracts. One contract will pay the $100 million in equal installments. The other contract will pay the $100 million in installments, but the installments increase 5% per year. Which athlete received the better deal? Please explain why.
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