A star basketball player signs a contract that newspaper reports indicate is worth $10 million. The player receives $2 million upon signing, and $2 million every year for four years. The contract is worth
A. less than $10 million since the present value of $2 million received one or more years from now is less than $2 million.
B. $10 million as reported in the press.
C. some amount around $10 million. To determine whether it is more or less than $10 million we need to know whether the interest the player can earn is more or less than the market rate of interest.
D. more than $10 million since the present value of $2 million received one or more years from now is more than $2 million.
Answer: A
You might also like to view...
A benefit that accrues to people other than the buyer of a good is known as ________ benefit
A) an internal B) an external C) a marginal D) a total E) a subsidized
Nominal GDP will increase
A) only if the quantity of final goods and services produced rises. B) if either the price level or the quantity of goods and services produced rises. C) only if the price level rises. D) only if the price level falls.
According to the law of supply, when the price of a good increases we would predict that: a. less will be produced
b. less will be consumed. c. more will be produced. d. more will be consumed.
The ______________is a period of production long enough for producers to adjust the quantities of all of their resources.
Fill in the blank(s) with the appropriate word(s).