Application of Time Value of Money Skills

Colin Closer 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 Ketchum Baldies; last year, 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 $16-3$ win$-$loss record, an

earned run average $($ERA$)$ of $2\mathrm{.}98,$ and $146$ strikeouts in $117\mathrm{.}0$ innings pitched. He is also your best friend.

Two weeks ago, on his three$-$year anniversary with the team, Colin received the following email from his agent, Marty Fineprint, indicating that he is

being called up to the Boston Back Bay Boys, the Baldies's corresponding Major League Baseball $($MLB$)$ team. Moreover, Colin's contract is being

revised to reflect his new status. The email describes the general terms and conditions of Colin's revised contract.

From: Marty Fineprint

To: Colin Closer

Subject: New Team, New Contract Proposal

Colin,

Congratulations! You've been called up to the Boston Back Bay Boys. Below are the

Colin is so excited! According to Marty, the contract is worth $$3,082,400-$assuming receipt of all possible bonuses. After rereading the email twice and

calling his family, Colin called you to review the terms of the contract and verify Marty's calculations. After an extended conversation about what he'll

do with his newfound wealth, you and Colin have agreed that any funds received could be invested to earn $9\mathrm{.}00\%,$ compounded monthly.