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 $ 590,000 2 years
Isabel 630,000 3 years
Meredith 480,000 Today
George 490,000 1 year
Required:
1-a. Assuming an annual discount rate of 10%, 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?