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Braggart McGee was recently drafted to play professional football for the Springfield Swindlers. The Swindlers offered Braggart a $30,000,000 four-year contract. He would be paid
Braggart McGee was recently drafted to play professional football for the Springfield Swindlers. The Swindlers offered Braggart a $30,000,000 four-year contract. He would be paid $1,500,000 at the end of the first year, %2,500,000 at the end of the second year, $3,000,000 at the end of the third year, and $23,000,000 at the end of the fourth year. Braggart's agent is trying to persuade him to make a counter-offer of $19,000,000 at the end of the first year and $2,000,000 at the end of years two, three, and four. Braggart does not understand why he would counter a $30,000,000 offer with a $25,000,000 request. The appropriate interest rate is 4%. What is the present value of the Swindlers' offer? What is the present value of the possible counter-offer? Change the interest rate from 4% to 12% and recalculate. What is the present value of the Swindlers' offer? What is the present value of the possible counter-offer? Round to the nearest whole number and no commas
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