An All-Pro defensive lineman is in contract negotiations. The team has offered the following salary structure: Time
Question:
An All-Pro defensive lineman is in contract negotiations. The team has offered the following salary
structure:
Time Salary
0 .............................. $7,900,000
1 .............................. 4,300,000
2 .............................. 4,900,000
3 .............................. 5,700,000
4 .............................. 6,700,000
5 .............................. 7,300,000
6 .............................. 8,400,000
All salaries are to be paid in a lump sum. 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 $3,500,000. He also wants an equal salary paid every three months, with the first paycheck three months from now. If the discount rate is 5.7 percent compounded daily, what is the amount of his quarterly check? Assume 365 days in a year.
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
Step by Step Answer:
Corporate Finance
ISBN: 978-1259918940
12th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan