Ch 05: Assignment Time Value of MB Back to Assignment Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm 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 Moab Mountain Goats; last year, he was the first runner-up for the Minor League Player e 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 2.98, 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, Gavin received the following email from his agent, Marty Fineprint, indicating that he is being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is being revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. Attempts negotiations for the rest of the day, so let's discuss your thoughts on the contract proposal tomorrow. I'm proud of yout Take care, Marty Marty Fineprint Sports Agent, R&R Talent Management Inc. | Wichita Gavin is so excited! According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin called you to review the terms of the contract and verify Marty's calculations. After an extended conversation about what i he'll do with his newfound wealth, you and Gavin have agreed that any funds received could be invested to earn 7,00%, compounded monthly. Contract Evaluation Worksheet. Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To clarify possible sources of confusion and simplify your calculations: Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were eamed. The endorsement proceeds are paid in accordance with the terms of the deal. Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, It may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. Round all dollar amounts to the nearest whole dolar and cairy out a 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 ch Gavin Goldenarm's Contract Evaluation Worksheet 3143 O G O Back to Assignment Attempts Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he wa starting pitcher for a double-A (AA)-level baseball team, the Moab Mountain Goats; last year, he was the first runner-up for the Minor League Play 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 earned 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, Gavin received the following email from his agent, Marty Fineprint, indicating that ha being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is being revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. Congratulations You've been called up to the Wichita Wizards. Below are the offered terms and conditions of your new contract. After you review them and think about the offer, call me and we'll discuss your options. Congrats again! Salary and Incentives: Gavin Goldenarm hereafter referred to as the "Player," is offered a four-year contract with an annual salary of $534,000 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 Gavin is so excited! According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin called you to review the terms of the contract and verify Marty's calculations. After an extended conversation about what be'll do with his newfound wealth, you and Gavin have agreed that any funds received could be invested to earn 7.00%, compounded monthly. T Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To darify possible sources of confusion and simplify your calculations: Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned. The endorsement proceeds are paid in accordance with the terms of the deal, Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interesti rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. Round all dollar amounts to the 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. Gavin Goldenarm's Contract Evaluation Worksheet C Back to Assignment Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he w starting pitcher for a double-A (AA)-level baseball team, the Moab Mountain Goats; last year, he was the first runner-up for the Minor League Pla 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 earned 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, Gavin received the following email from his agent, Marty Fineprint, indicating that h being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is beim revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. Attempts 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 $15,000 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. The Player is offered a performance-based bonus, as well as a milestone bonus. Both are intended to encourage outstanding performance. Gavin is so excited! According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin 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 Gavin have agreed that any funds received could be invested to earn 7,00%, compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To clarify possible sources of confusion and simplify your calculations: Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned. The endorsement proceeds are paid in accordance with the terms of the deal. Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. Round all dollar amounts to the 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 caloudate another answer, do not round. ich Gavin Goldenarm's Contract Evaluation Worksheet 343 O # e O Back to Assignment Attempts Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he wa starting pitcher for a double-A (AA)-level baseball team, the Moab Mountain Goats; last year, he was the first runner-up for the Minor League Plan 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 earned 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, Gavin received the following email from his agent, Marty Fineprint, indicating that hi being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is beine revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. following milestone bonus: a $75,000 bonus if he ties Nolan Ryan's 1973 single-season strikeout record (383 strikeouts). The Player is eligible for each potential bonus each year that the contract is t In effect and, if expressed as a percentage, will be based on the value of the Player's base annual salary for the corresponding year. If earned, the performance and milestone bonuses will be distributed in a single payment at the beginning of the next contract year. Although this proposal describes only one milestone, the actual contract contains several progressive milestones. Exceeding one milestone creates the opportunity to exceed another. D Gavin is so excitedi According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin 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 Gavin have agreed that any funds received could be invested to earn 7.00%, compounded monthly. JU Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To darity possible sources of confusion and simplify your calculations Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned The endorsement proceeds are paid in accordance with the terms of the deal Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropelate interest rate that should be used in a discounting calculation. Round all dollar amounts to the 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 Gavin Goldenarm's Contract Evaluation Worksheet A Back to Assignment mol Attempts Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he was starting pitcher for a double-A (AA)-level baseball team, the Moab Mountain Goats; last year, he was the first runner-up for the Minor League Plays 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, earned 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, Gavin received the following email from his agent, Marty Fineprint, indicating that he being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is being revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. bonus. Both are intended to encourage outstanding performance. The Player is offered the following award-based performance incentive: a 15% bonus if he is selected for consideration of a major award-such as the Cy Young Award (for outstanding pitching). The Player is also offered the following milestone bonus: a $75,000 bonus if he ties Nolan Ryan's 1973 single-season strikeout record (383 strikeouts). The Player is eligible for each potential bonus each year that the contract is In effect and, if expressed as a percentage, will be based on the value of the Player's base annual salary for the corresponding year. If earned, the D Gavin is so excited! According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin 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 Gavin have agreed that any funds received could be invested to earn 7.00%, compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To clarify possible sources of confusion and simplify your calculations Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were eamed. The endorsement proceeds are paid in accordance with the terms of the deal. Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should be used a discounting calculation. Round all dollar amounts to the 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 Gevin Goldenarm's Contract Evaluation Worksheet Back to Assignment Attempts Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he was starting pitcher for a double-A (AA)-level baseball team, the Moab Mountain Goats; last year, he was the first runner-up for the Minor League Player the Year award. Using his 96 mph fastball, an impeccable curve ball and sildec, and a reliable changeup pitch, he achieved a 16-3 win-loss record, an earned 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, Gavin received the following email from his agent, Marty Fineprint, indicating that he is being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is being revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. following milestone bonus: a $75,000 bonus if he ties Nolan Ryan's 1973 single-season strikeout record (383 strikeouts). The Player is eligible for each potential bonus each year that the contract is in effect and, if expressed as a percentage, will be based on the value of the Player's base annual salary for the corresponding year. If earned, the performance and milestone bonuses will be distributed in a single payment at the beginning of the next contract year. Although this proposal describes only one milestone, the actual contract contains several progressive milestones. Exceeding one milestone creates the opportunity to exceed another. D Gavin is so excited! According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin 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 Gavin have agreed that any funds received could be invested to earn 7.00%, compounded monthly Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To clarify possible sources of confusion and simplify your calculations: Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned. The endorsement proceeds are paid in accordance with the terms of the deal. Remember that the timing of a cash flow affects the Interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should I used in a discounting calculation. Round all dollar amounts to the 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 56 Gavin Goldenarm's Contract Evaluation Worksheet 8623 ck to Assignment Attempts Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm 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 Moab Mountain Goats; 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 2.98, 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, Gavin received the following email from his agent, Marty Fineprint, indicating that he is being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is being revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. A local car dealer has offered you a contract that will pay $3,000 per month for two years. This contract is contingent on your accepting the contract with the Wizards and will take effect immediately upon signing your MLB contract. In return for these payments, you will participate in the dealer's promotional events, such as signing autographs and allowing photographs as requested. I've also attached a worksheet that you can use to analyze the deal. I'm in negotiations for the rest of the day, so let's discuss your thoughts on the contract proposal tomorrow, I'm proud of you! Gavin is so excited! According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin called you to review the terms of the contract and verify Marty's calculations. After an extended conversation about what bell do with his newfound wealth, you and Gavin have agreed that any funds received could be invested to eam 7.00%, compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To darify possible sources of confusion and simplify your calculations: Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned. The endorsement proceeds are paid in accordance with the terms of the deal. Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. Round all dollar amounts to the 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. Gavin Goldenarm's Contract Evaluation Worksheet 343 O 27 ack to Assignment Attempts Keep the Highest/3) 16. Application of Time Value of Money Skills Gavin Goldenarm 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 Moab Mountain Goats; last year, he was the first runner-up for the Minor League Player off 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 2.98, 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, Gavin received the following email from his agent, Marty Fineprint, indicating that he is being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is being revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. Player's base annual salary for the corresponding year. If earned, the 1 performance and milestone bonuses will be distributed in a single payment at the beginning of the next contract year, Although this proposal describes only one milestone, the actual contract contains several progressive milestones. Exceeding one milestone creates the opportunity to exceed another. In addition to the proposal offered by the Wizards, I've also been able to secure the following endorsement opportunity: A local car dealer has offered you a contract that will pay $3,000 per month for D Gavin is so excited: According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin 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 Gavin have agreed that any funds received could be invested to earn 7.00%, compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate valoes to evaluate the contract and answer the related questions. Note: To clarify possible sources of confusion and simplify your calculations: Assume that all bonuses are earried in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were eamed. The endorsement proceeds are paid in accordance with the terms of the deal. Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. Round all dollar amounts to the 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 Gavin Goldenarm's Contract Evaluation Worksheet 343 1 ck to Assignment Attempts Keep the Highest/3 16. Application of Time Value of Money Skills Gavin Goldenarm 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 Moab Mountain Goats; 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 2.98, 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, Gavin received the following email from his agent, Marty Fineprint, indicating that he is being called up to the Wichita Wizards, the Mountain Goats's corresponding Major League Baseball (MLB) team. Moreover, Gavin's contract is being revised to reflect his new status. The email describes the general terms and conditions of Gavin's revised contract. A local car dealer has offered you a contract that will pay $3,000 per month for two years. This contract is contingent on your accepting the contract with the Wizards and will take effect immediately upon signing your MLB contract. In return for these payments, you will participate in the dealer's promotional events, such as signing autographs and allowing photographs as requested. I've also attached a worksheet that you can use to analyze the deal. I'm in negotiations for the rest of the day, so let's discuss your thoughts on the contract proposal tomorrow, I'm proud of you! Gavin is so excited! According to Marty, the contract is worth $2,816,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Gavin called you to review the terms of the contract and verify Marty's calculations. After an extended conversation about what bell do with his newfound wealth, you and Gavin have agreed that any funds received could be invested to eam 7.00%, compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To darify possible sources of confusion and simplify your calculations: Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned. The endorsement proceeds are paid in accordance with the terms of the deal. Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. Round all dollar amounts to the 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. Gavin Goldenarm's Contract Evaluation Worksheet 343 O 27 Cavin Goldenarm's Contract Evaluation Worksheet 1 A Assumptions and Calculated Values 2 Bank Rate Information: 3 Gavin's Bank Account Rate 7.00 (compounded monthly) 4 Monthly Bank Rate 5 Effective Annual Interest Rate 6 7 Salary and Bonus Year 1 Information: Annual Salary (4% COLA) S 9 Monthly Salary 10 Discount factor (based on Cell 04 above) Discounted Annual Salary Time-in-League Bonus 11 12 13 14 Cell 04 above) Discount factor (based on 15 Discounted Time-in-League Year 2 Year 3 Year 4 Total value S 5 E S 11.557120140 10.77797916 10.051355156 9.373736953493 S 0.9657 Bonus 16 17 Milestone Bonus 18 Discount factor (based on 0.9326 0.8697 0.8111 0.7564 Call 85 above) 19 Discounted Milestone Bonus S 20 21 Performance Bonus 22 Discount factor (based on 0.9326 0.8697 0.8111 0.7564 Cell 85 above) 23 Discounted Performance Bon 24 25 Monthly Endorsement Contract Payment 26 Discount factor (based on Call 84 above) 27 Discounted Monthly 11.5571 10.7780 S Endorsement Payment 28 29 Contract's Total Nominal O Cell B4 above) 11 Discounted Annual Salary 12 13 Time-in-League Bonus 141 Discount factor (based on 0.9657 Cell B4 above) 15 Discounted Time-in-League Bonus 16: 17 Milestone Bonus 18 Discount factor (based on 0.9326 0.8697 0.8111 0.7564 Cell 85 above) 19 Discounted Milestone Bonus 20 21 Performance Bonus 22 Discount factor (based on 0.9326 0.8697 0.8111 0.7564 Cell B5 above) 23 Discounted Performance, Bonus 24 25 Monthly Endorsement Contract Payment 26 Discount factor (based on 11.5571 10.7780 Cell 84 above) 27 Discounted Monthly Endorsement Payment 28 29 Contract's Total Nominal Value 30 Contract's Total Discounted Value 1. Given your worksheet calculations, which of the following statements is accurate? Is Marty's estimate of the value of Gavin's contract accurate on either a nominal or discounted basis? Check all that apply. It is appropriate and necessary to discount the performance bonus using the bank account's effective annual interest rate because of differences in the timing of the compounding of the bank account and that of the payments for the performance bonus. Marty's estimate of the nominal value of Gavin's contract is correct. Marty's estimate of the value of Gavin's contract is incorrect on a nominal basis, and the error is $54,239. Related Question: The local car dealer creating Gavin's endorsement opportunity can earn 6% (compounded quarterly) on his deposited funds. She would have to deposit S each quarter, starting exactly two years before the day Gavin signs his contract, to fund her endorsement contract. (Note: The future value interest factor of 6% compounded quarterly for eight quarterly periods is 8.4328.] Grade It Now Save & Continue