Excel workbook

Instructions

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

NPVandPV

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

The Widget-o-matic and Sprocket-o-matic are machines that will provide revenue to our company. The Widget-o-matic provides $4,000 per year and lasts 9 years. The Sprocket-o-matic provides $6,000 per year, but only lasts 5 years. The timelines below show the expected revenue each year, which we will assume is earned in a lump sum at the end of each year; use the discount rate in cell B2 when calculating the present value. Determine the present value of revenue flows of each machine below using the NPV() function. You should be able to write your formula in cell B14 and copy it into cell C14. As always, remember to reference cells wherever possible (instead of typing in the values).

The table below has the same information about the two machines, but without the timeline. In cells B22:C22, use the PV() function to calculate the present value of each machine, referencing cells B19:C21. Of course, the values you find should match the values in B14:C14.

Blackmail

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

During the year that you won the Heisman trophy, an agent (Michael Michaels) gave you free money, travel, and a home for your parents. He hoped that you would sign with his firm. You didn’t sign with his firm, and he is upset. You don’t want him to go public with the story because your actions are against NCAA rules. To keep Mr. Michaels quiet, you agree to pay him $430,000 at the end of each year you play in the NFL. Today you started your rookie season, and you anticipate playing for 6 years. Assume a 6.75% rate. First, fill in the cells below (B2:B4) with the information from the problem, then answer the question below by putting a formula in cell A6 that references the cells in B2:B4.

What would you have to put away if the rate were 5.5%? Put the new rate is cell A10, then solve the problem in cell A12. Finally, determine the nominal value of the payments in cell A15.

StockTiming

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

A share of Daktronics (DAKT) traded at $9.52 on Sept 27, 2016. Shares used to trade at $1.28. The company has had a great annual growth rate of 33.2782%. First, fill in cells B2:B4 with the information from the problem, then answer the question below.

Options

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

You are receiving a one-time payment a certain number of years in the future. You're given two options, A & B, the details of which are shown below. Assume the discount rate is 11% (which will go in cell B2), and that both alternatives have equal risk. Calculate the PV of each offer (in cells B7 & B12). Once you have completed both calculations, your choices of the better offer will automatically appear in cell A14.

In the space below, plug in the values from these two scenarios and calucate the future value for each of the lump sums. Option A: $26,000, 18 years from now, assuming a rate of 8.5% Option B: $54,500, 5 years from now, assuming a rate of 7%

USOpen

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

In 1895, the first U.S. Open Golf Championship was held in Newport, RI. The winner’s prize money was $150. In 2016, the winner’s check was $1,800,000. At what rate did the winner’s check increase per year over this period?

Contest

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

You hit a half-court shot during a time-out at a WCU basketball game. The PA announcer congratulates you and informs that crowd that you just won $1,000,000! When you meet with the game staff, however, you learn that the $1,000,000 is paid in 25 annual payments of $40,000 each with the first payment being made tonight after the game. Assuming a 8.15% rate, what is the actual present value of your prize? Determine the present value using the most concise formula possible. You may use actual numbers in your formulas (you don't need to use cell references).

ARod

&"-,Bold"&14Sport Finance Excel Homework Tab: &A

Below is the contract that Alex Rodriguez signed with the Rangers in 2000. The value of payments in each year is shown in Column E; as you can see in the formula, it combines the Base salary (column B), any bonus money (column C), and any deferred compensation (column D). Assume that all payments occurred at the end of the year. There is no signing bonus. First, determine the present value for each year of the contract (2001 would be "year 1"). You should do this by writing one formula in F4 and copying it down through F5:F23, referencing the rate in A25. The total nominal value for each year is already calculated in Column E, and your PVs should come from the nominal values in Column E. Hint: To have the years (nper) change automatically, subtract the initial year (2000) from the year for which you're trying to find the PV. Next, answer the questions in rows 28 and 30.