Question

CSePub Home Book StoreInstructors Independent Authors About Abiet player 's onered a Syear cortract that prys him,the lakomng amonts Year 1 $109 mn har 2 51.64 milion Year 3.32 22 million Year 4$2 90 mlin Year 5 $323 million Under the leems of the agreement all payments ane made at the end of each year Inslead of accepting the contbract, the baseball player asks his agent to regolidie a contract that han a present value of $1 97 million mone han that which has been offered Moreover, Be player warts to receive his payments in the form of a 5-year ANNUITY DUE All canh Rows are dscounled at 10 00 percent i the leiam were lo agree to the player's terms, what would be the player's annual salary (n ins of dollany? (Eopress answer mo 31,000 000 would be 1.00) Answer Format. Currency: Round to: 4 decimal places Enter Answer Here Subrrl Answer @ePrev Protíem t Al Problems Ned Patlem Contact Us Privacy Polcy Terms

Answer 1

Year	cash flow	present value of cash flow = cash flow/(1=r)^n r =10%
1	1.09	0.990909091
2	1.64	1.355371901
3	2.22	1.667918858
4	2.9	1.980739021
5	3.23	2.005575873
present value of offered cash flow		8.000514744
additional amount to be demanded		1.97
total amount demanded by player		9.970514744
annual salary in billions -Using pmt function in MS excel	pmt(rate,nper,pv,fv,type) rate =10% nper = 5 pv =-9.9705 fv =0 type = 1	PMT(10%,5,-9.9705,0,1)	$2.39