The Buffalo News headline read “Start up by UB student sold for $250 million to major tech firm”. But, a deeper dive into the story revealed that these benefits would be realized over 5 years after the contract was signed in 2022. The terms of the contract were $80 million in cash available immediately, a job with the tech firm with an annual compensation of $5 million for the next 5 years, and a stock option paid as $15 million for year 1, $25 million for year 2, and $35 million for last 3 years. Assuming a constant interest rate of 8%, what would this contract be worth at the time of the signing?
The Buffalo News headline read “Start up by UB student sold for $250 million to major tech firm”. But, a deeper dive into the story revealed that these benefits would be realized over 5 years after the contract was signed in 2022. The terms of the contract were $80 million in cash available immediately, a job with the tech firm with an annual compensation of $5 million for the next 5 years, and a stock option paid as $15 million for year 1, $25 million for year 2, and $35 million for last 3 years. Assuming a constant interest rate of 8%, what would this contract be worth at the time of the signing?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The Buffalo News headline read “Start up by UB student sold for $250 million to major tech firm”. But, a deeper dive into the story revealed that these benefits would be realized over 5 years after the contract was signed in 2022. The terms of the contract were $80 million in cash available immediately, a job with the tech firm with an annual compensation of $5 million for the next 5 years, and a stock option paid as $15 million for year 1, $25 million for year 2, and $35 million for last 3 years. Assuming a constant interest rate of 8%, what would this contract be worth at the time of the signing?
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