1. Application of Time Value of Money Skitla Hariy plurler has been piaying basebas since he was five years old and has atways dreamed ef paring bo the big leagues. Lat seatin, fie was a Ttem: Woan Never-Rnough To: Marry Hupler Subject: New Team, New Centract Prepesal Harficis From: Noah Never-Enough Tol Marry tharler Subjects New Team, New Contract Propisa? Hamy. obout the offer, cal me and ant diedt por optiene Conorate op aiel tiaiafy and Thee rivet: fath mareh at the rarertst term. aticcostit. immed ately on completion of the sxumonh period - The Player ss effered a performance-based bonus, as inell as a milpatare bonut. Both arn intended to encourept oubslanding periormaven. - The Flayer is offered the folowing sward-based perturmanoe incentivei a 15% boras if he in designated as the Mast Valable Maver iMrps in to . . league. The Wayer is aiss effered the tafgwing milestatie bonak: a 3150,000 Bonus if he ties Nolan pyani 1473 singlesseason wriefout inoord (363 strikeouts. - The Fiayer is eigbie for nach potential bohat each pear that the centract an in elfect and, if expressed as a percentage, wel be based on the vilie or the Bxyer' base anfwal salary for the correapondeng reac. If carwet, the periarmance and pilestbene beruses w E be dhtributed in a single permert of the beginning of the reat comract year, Nehoryh this brocosat dewo bes ony Eaceeding of milestspe creales the oscectionay lesereti anether. the fakining eridarstement ewertuuty! A ioral far dealer has satered yeu a eentract that wi pay 1 soo eer menth fur tas Years. This contract is corbergent an reur acceatieg the cestrait aith the ftura for these poymente, rou wal particoete on the deacrs promatiengl. TYe atso attached a workehiest that you can whe th aralpe the deat. Im in peocestans for she rese of the day, ao lers ascun your theughts on me copleat ifropesal tonecrew. In preve of youl. and calling his family. Harry called you to review the tenms of the contract and verify hoah's catculations. After an extended ommerrabon about atut Contract Evaluation Wurksheet. Ceinpiete the foliowing worktheet by inserting the apsropriate values to evaluate the contract ard anwwer the related guestions: Notet to clanfy possible sourchs of confusion and simpity your calculations: - Assurne that all bomuses are sarned in each of the years for which they are tralgole and the pave at the end it ith comesponding earned. - The endorsement proceeds are paid in accordence wits the teems of the deal. - He mermber that the timing of a cash fow affects the inserest fate that is used to dighont ghe cash fow. Fur esampir, arauar infereit If Thay be necessary to corvpute the approspiate interest rate that shauld be used in a disountieg calcularian. values to calsylate arvother a hitwer, do not round. Marry Murler's Centract Evaluation Worksheet 2. Bank Rate Information 3 Harry's Benk Account Rate (compounded monthly) (4) Monthly Bank Rate 5 Eltective Atrued interest Hate Salary and Bonus Tnfermatiser Afmisal sidiery (av cola) 14 Ponthil faialy. 10. berount factor cbased an Cell al atropel 11 Decounted Annues swlary 122 13) Trime-iniceabue deries 14 Divounc focter (based on Eeald aborel 1s Discounted Time-iniunwout. ponus 161 12. Novistice Bonux 18. piscount faceor (basint on 0.9142 0.5358 nd Study Tocks 13: Timein-league tionus. 14. Discounc facter (based on Cell by aboivel 15. Dhcounted Time-in-teague Bones nerinak 24 34. Mowary Enawrierturet Contract Paymert. 25 Decourt tector Llased on CeE b4 abow? O ocoshned pantiv Endoneriant paymient Controct's toeal Nominal yalue 30 contraks Tiral Discounted eitzet a nomirat tor discusted basivi. Chark ald dar aldy. Yoodep os mevingin - dode are ae nawa insed paqunosta se remion e iauare
