Exercise 5-5 (Algo) Present value; single amount (LO 5-3) The four actors below have just...

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Accounting

Exercise 5-5 (Algo) Present value; single amount (LO 5-3)

The four actors below have just signed a contract to star in a dramatic movie about relationships among hospital doctors. Filming is expected to take two years to complete. Each person signs independent contracts today with the following terms:

	Contract Terms
Contract Amount	Payment Date
Derek	$ 580,000	2 years
Isabel	620,000	3 years
Meredith	490,000	Today
George	480,000	1 year

Required:

1-a. Assuming an annual discount rate of 8%, calculate the present value of the contract amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

1-b. Which of the four actors is actually being paid the most?

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