What Is the Maximum Price You Should Pay for a Contract

question 179

Short Answer

What is the maximum price you should pay for a contract guaranteeing month-end payments of $500 for the next 12 years if you require a minimum rate of return of at least 8% compounded monthly for the first five years and at least 9% compounded monthly for the next seven years?

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Definitions:

Specific Performance

A legal remedy in contracts where a court requires a party to perform their specific duties under the contract, rather than pay damages for not fulfilling the contract.

Personal Services

Services performed by an individual, often requiring specialized skills or knowledge, such as consulting, healthcare, or personalized instruction.

Madison Square Garden

A famous multi-purpose indoor arena located in New York City, known for hosting sports events, concerts, and other entertainment activities.

Breach of Contract

The violation of any agreed-upon terms and conditions in a binding contract without lawful excuse.