Michael Received a Professional Baseball Contract Paying $7,000,000 Per Year

question 23

Multiple Choice

Michael received a professional baseball contract paying $7,000,000 per year for 5 years,Bert received a two-year contract for $16,000,000 per year.For purposes of calculations,treat these contracts as ordinary annuities.Who's contract has a greater present value if we assume a discount rate of 6%?

• A)Bert = $29,334,283
• B)Michael = $29,486,547
• C)Bert = $39,459651
• D)Michael = $39,743,196

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Definitions:

Yards Per Unit

A measurement indicating the amount of yardage (length) required or produced per unit of a product.

Actual Costs

The real or precise cost incurred in the production of goods or in the rendering of services, as opposed to estimated or standard costs.

Direct Labor Time Variance

This metric measures the difference between the actual hours worked and the standard hours planned, multiplied by the standard labor rate, assessing efficiency in production.

Direct Labor Hours

The total number of hours worked by employees directly involved in the manufacturing process, used as a measure for assigning labor costs to produced goods.