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Question 1

Ahmed is a professional football player in UAE. Aljazeera Club is negotiating with him to join the club. The Club presented two offers to Ahmed; the first one is to pay him a big bonus on the signing day of the contract and smaller payments in the future, or a small amount now and bigger payments in the future. Which option should Ahmed accept and why? What about Aljazeera Club, which option is better for them?

Sagot :

Answer and Explanation:

Ahmed should apply for bid bonus on signing day and the less payment in the future as according to the time value of money the money that should be received tomorrow would be less than the money received today so you can buy less things from the similar amount of money as compared with the purchase made at today. Therefore this is the reason to select this as it contains the high value

On the other hand Aljazeera would like to have less amount and the greater payment in the future as the present value would be less as compared to the future value

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