Question

Les moore retired as president of goodman snack foods company but is currently on a consulting contract for $35,000 per year for the next 10 years. use appendix b and appendix d for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a. if mr. moore's opportunity cost (potential return) is 10 percent, what is the present value of his consulting contract? (do not round intermediate calculations. round your final answer to 2 decimal places.)

Answer 1

$215,059.85

Step-by-step explanation:

we are not given appendix b or d, but we can still calculate the present value of Moore's contract using a 10% discount rate. You can use a financial calculator, but I prefer an excel spreadsheet with the net present value function:

=NPV(cash flows,rate) =NPV(35000 ... 35000,10%) = $215,059.85