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.

Flynn Fireballer's Contract Evaluation Worksheet

A

B

C

D

E

F

$1$ Assumptions and

Calculated Values

$2$ Bank Rate Information:

$3$ Flynn$\text{'}$s Bank Account Rate

$($compounded monthly$)$