A noted free agent running back just signed a four-year 30-million dollar contract with a new team
He will
get a 7-million dollar signing bonus and a 4.5 -million dollar roster bonus. Additionally, he will get 3.25
million for year one, 5.25 million for year two, 5 million for year three, and 5 million for year four. Salary is
paid at the end of the first year. Construct a table that shows the present value of his contract if money can
earn 6%.
Year of
Contract
Contract Payment PVF Value
0 $11,500,000.00 1 $11,500,000.00
1 3,250,000.00 0.943396 3,066,037.74
2 5,250,000.00 0.889996 4,672,481.31
3 5,000,000.00 0.839619 4,198,096.42
4 5,000,000.00 0.792094 3,960,468.32
Contract PV = $ 27,397,083.78
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