3. 59.

Calculating annuity values [LO 6.1] A half-back in the AFL is in contract negotiations. The team has offered the following salary structure:

All salaries are to be paid in lump sums. The player has asked you as his agent to renegotiate the terms. He wants a $10 million signing bonus payable today and a contract value increase of $2 million. He also wants an equal salary paid every three months, with the first salary payment three months from now. If the interest rate is 4.8 per cent compounded daily, what is the amount of his quarterly salary payment? Assume 365 days in a year.

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Time Salary 0 $8400000 1 $4700 000 2 $5 100 000 3 $5700000 4 $6400 000 5 $7 100 000