Question
Dallas cowboys wide receiver John Young will earn either $11,406,000 over 12 years or $8,600,000 over 6 years. Young must declare which plan he prefers.
Dallas cowboys wide receiver John Young will earn either $11,406,000 over 12 years or $8,600,000 over 6 years. Young must declare which plan he prefers. The $11 million package is deffered through the year 2017, while the non-deferred arrangement ends after the 2011 season. Regardless of which plan is chosen, Young will be playing through the 2011 season. The details of the two plans are given below. Write the assumptin on the planning horizon
| Year | Deferred | Non deferred |
| 2006 | $2,000,000 | $2,000,000 |
| 2007 | $566,000 | $900,000 |
| 2008 | $920,000 | $1,000,000 |
| 2009 | $930,000 | $1,225,000 |
| 2010 | $740,000 | $1,500,000 |
| 2011 | $740,000 | $1,975,000 |
| 2012 | $740,000 | |
| 2013 | $790,000 | |
| 2014 | $540,000 | |
| 2015 | $1,040,000 | |
| 2016 | $1,040,000 | |
| 2017 | $1,260,000 |
Total $11,406,000 $8,600,000
Young's TVOM is 6%. Based on Present worth, Future Worth and Annual worth, find the best plan for John Young. (Year 2006 is EOY = 0)
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