Assume in 2007, an athelete signed a contract reported to be worth $290 million.

Question

Assume in 2007, an athelete signed a contract reported to be worth $290 million. The contract called for $5.75 million immediately and $42 million in 2008. The remaining $242.25 million was to be paid as $18 million in 2009, $18 million in 2010, $17 million in 2011, $15 million in 2012, $47 million in 2013, $40 million in 2014, $36 million in 2015, $35 million in 2016 and $16.25 million in 2017.

If the appropriate interest rate is 11 percent, what kind of deal did the athelete snag? Assume all payments other than the first $5.75 million are paid at the end of the year. (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations.Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).)

Assume in 2007, an athelete signed a contract reported to be worth $290 million. The contract called for $5.75 million immediately and $42 million in 2008. The remaining $242.25 million was to be paid as $18 million in 2009, $18 million in 2010, $17 million in 2011, $15 million in 2012, $47 million in 2013, $40 million in 2014, $36 million in 2015, $35 million in 2016 and $16.25 million in 2017.

Explanation / Answer

Present Values = 5.75 + 42/1.11 + 18/1.11^2 +18/1.11^3 +17/1.11^4 +15/1.11^5 + 47/1.11^6 +40/1.11^7 + 36/1.11^8 + 35/1.11^9 +16.25/1.11^10 = $170.88 million

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.