19. Discounted Milestone Bonus 201 21 Performance Bonus 22 Discount factor lbased on Cell E5 abowe) 23 Discounted Performance Bonus 24 25 Monthly Endorsement Contract Payment 26 Discount factor (based on 11.4653 10.5342 Cell B4 above) 27. Discolinted Monthly Endorsement Payment: 28 29 Contract's Total Nominal value 30. Contract's Total Discounted value either a nominal or discounted bosis? Check ail that apply. Steven's estimate of the nominal value of Harry's contract is correct. Steven's estrmate of the value of Harry's controct is incorrect on a nominal basis, and the error is $50,389. It is appropriate and necessary to discount the performance bonus using the bank accounts effective annust the rent rate because of differences in the timing of the compounding of the bank account and that of the payments for the performance bonus. Related Questiont The local car deaier creating Harry's endorsement opportunity can earn 6% (compounded quarterty) on his depovithd funds. She would have to deposit each quarter, starting exactiy two years before the day Harry signs his contract, to fund her endorsemen contract. (Note: The future value intereat factor of 6% compounded quarterly for eight quarterly periods is 8.4328 ] - A 1. Assumptions and Calculated Values 2 Bank Rate Information: 3. Harry's Bank Account Plate (compounded monthly) 4. Monthly Bank Rate 5 Effective Annuar interest Rate \begin{tabular}{|c|c|c|c|c|c|c|} \hline & Information: & & & & Year 4 & \\ \hline 8 & Annual Salary ( 4% colA) & 1 & 8 & 3 & 5 & 5 \\ \hline 9 & Monthly Salory & 5 & 6 & 3 & 3 & \\ \hline 10 & \begin{tabular}{l} Discount factor (based on \\ Cell B4 above) \end{tabular} & 11.465288858 & 10.53416451 & 9.678659070 & 8.892631331225 & \\ \hline 11 & Discounted Annual Salary & 1 & 5 & 8 & 3 & 5 \\ \hline 12 & & & & & & \\ \hline 13 & Time-in-League Bonus & 5 & & & & 5 \\ \hline 14. & \begin{tabular}{l} Discount factor (based on \\ Cell B4 above) \end{tabular} & 0.9585 & & & & \\ \hline 15 & Discounted Time-in-Lesgue & 5 & & & & a \\ \hline & Bonus & & & & & \\ \hline 16 & & & & & & \\ \hline 17 & Milestone Bonus & 5 & s & 5 & 3 & 5 \\ \hline 18 & Discount factor (based on & 0.9188 & 0.8442 & 0.7756 & 0,7126 & \\ \hline \end{tabular} contract with an annual salary of $594,000 per year, to be paid at the end of each month in the contract term. - Under the league's collective bargaining agreement, the Player will receive a 4% cost-of-living adjustment (COLA) to his annual salary at the beginning of every other year. This means that the Player's annual salary will increase at the beginning of year 2 and year 4 , as applicable. - In addition, the Player will receive a one-time $20,000 time-in-league bonus after six months of participation with an MLB team. This bonus will be paid immediately on completion of the six-month period. 16. Application of Time Value of Money Skills Harry Hurler has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he was a starting pitcher for a double-A (AA)-level baseball team, the Yakima Hop5; last vear, he was the first runner-up for the Minor League Player of the Year award. Using his 96 mph fastball, an impeccable curve ball and slider, and a reliable changeup pitch, he achieved a 163 win-loss record, an eamed run average (ERA) of 2.98, and 146 strikeouts in 117.0 innings pitched, He is also your best friend. Two weeks ago, on his three-year anniversary with the team, Harry recelved the following emnil from his agent, Steven Sign'em Naw, indlicating tha he is being called up to the Boston Back Bay Boys, the Hops's corresponding Major League Baseball (MLB) team. Moreover, Harrys contract is being revised to reflect his new status. The emall describes the general terms and conditions of Harry's revised contract. Contract Evaluation Worksheet Notes ro darry posiple suurcis of confusion and simpity your calculations: yeur(e) infiess specifically stoted differently. Their value should be based on the salary in effect at the time the bonuses were comed. - The endor ment procecole are paid in sccordance with the terms of the deal. irates should be used to discount annual cash fows, and monthily interest rates are used to discount monthiy cash nows. Therefore, It mav be necessary to compute the appropriate interest rate that should be used in a discounting caliculation. * Round ali dollar amounts to then nearest whole dollar and carry out all interest rate factors to four decimal places. - When entering intermediate values as answer choices, be sure to round them to the nearest dollar, however when using those same values to calculate another answer, do not round