Flynn Conaratulations! You've been called up to the Wichita Wizards. Below are the offered Flynn is so excited! According to Steven, the contract is worth $2,964,400-assuming receipt of all possible bonuses. After rereeding the email twice and calling his family, Flynin called you to review the terms of the contract and verify Steven's calculations. After an extended conversation about what he' do with his newfound wealth, you and Flynn have agreed that any funds received could be invested to earn 9.00%, compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evalunte the contract and answer the related constions Notes To clarify possible sources of confusion and simplify your calculations Assume that all bonuses are eamed in each of the years for which they are avadable and are paid at the end of the corresponding vow().unleu peorically stated differently. Ther value should be based on the story in effect at the time the bonuses were eamed The endorsement proceeds are paid in accordance with the terms of the deal . Ammeber that the timing of a cash flow affects the interest rate that is sed to discount the cash flow. For example, non interest rates should be used to discount animal cash flows, and monthly interest rates are used to discount monthly cash flow. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation, Round w dollar amounts to the nearest whole doilar 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 Flynn Fireballer's Contract Evaluation Worksheet Year 1 Year 2 Year a Year 1 Total value 1 Assumptions and Calculated Values 2 Bank Rate Information 3 Flynn's Bank Account Rate (compounded monthly) 4 Monthly Bank Rate 5 Effective Annual interest Rate 6 7 Salary and Bonus Information: # Annual salary (4% COLA) Monthly Glory 19 Discount factor (based on Cell B4 above) 11 Discounted Annual Salary 12 13 Time-in-League Bonus 14 Discount factor (based on Cell B4 above) 15 Discounted Time-in-League Bonus 11.4349 10.4542 9.5572 8.7380 0.9562 Ch 05: Assignment - Time Value of Money Cell B4 above) 11 Discounted Annual Salary 12 13 Time-in-League Bonus 14 Discount factor (based on Cell B4 above) 15 Discounted Time-in-League Bonus 0.9562 16 0.9142 0.8358 0.7641 0.6986 0.9142 0.8358 0.7641 0.6986 17 Milestone Bonus 18 Discount factor (based on Cell B5 above) 19 Discounted Milestone Bonus 20 21 Performance Bonus 22 Discount factor (based on Cell BS above) 23 Discounted Performance Bonus 24 25 Monthly Endorsement Contract Payment 26 Discount factor (based on Cell B4 above) 27 Discounted Monthly Endorsement Payment S la no 11.4349 10.4542 11.4349 10.4542 24 25 Monthly Endorsement Contract Payment 26 Discount factor (based on Cell B4 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 Steven's estimate of the value of Flynn'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. It is appropriate and necessary to discount the endorsement contract 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 on the endorsement contract. Steven's estimate of the value of Flynn's contract is incorrect on a nominal basis, and the error is $16,938, Related Question: The local car dealer creating Flynn's endorsement opportunity can earn 6% (compounded quarterly) on his deposited funds. She would have to deposits each quarter, starting exactly two years before the day Flynn 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.] Flynn Conaratulations! You've been called up to the Wichita Wizards. Below are the offered Flynn is so excited! According to Steven, the contract is worth $2,964,400-assuming receipt of all possible bonuses. After rereeding the email twice and calling his family, Flynin called you to review the terms of the contract and verify Steven's calculations. After an extended conversation about what he' do with his newfound wealth, you and Flynn have agreed that any funds received could be invested to earn 9.00%, compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evalunte the contract and answer the related constions Notes To clarify possible sources of confusion and simplify your calculations Assume that all bonuses are eamed in each of the years for which they are avadable and are paid at the end of the corresponding vow().unleu peorically stated differently. Ther value should be based on the story in effect at the time the bonuses were eamed The endorsement proceeds are paid in accordance with the terms of the deal . Ammeber that the timing of a cash flow affects the interest rate that is sed to discount the cash flow. For example, non interest rates should be used to discount animal cash flows, and monthly interest rates are used to discount monthly cash flow. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation, Round w dollar amounts to the nearest whole doilar 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 Flynn Fireballer's Contract Evaluation Worksheet Year 1 Year 2 Year a Year 1 Total value 1 Assumptions and Calculated Values 2 Bank Rate Information 3 Flynn's Bank Account Rate (compounded monthly) 4 Monthly Bank Rate 5 Effective Annual interest Rate 6 7 Salary and Bonus Information: # Annual salary (4% COLA) Monthly Glory 19 Discount factor (based on Cell B4 above) 11 Discounted Annual Salary 12 13 Time-in-League Bonus 14 Discount factor (based on Cell B4 above) 15 Discounted Time-in-League Bonus 11.4349 10.4542 9.5572 8.7380 0.9562 Ch 05: Assignment - Time Value of Money Cell B4 above) 11 Discounted Annual Salary 12 13 Time-in-League Bonus 14 Discount factor (based on Cell B4 above) 15 Discounted Time-in-League Bonus 0.9562 16 0.9142 0.8358 0.7641 0.6986 0.9142 0.8358 0.7641 0.6986 17 Milestone Bonus 18 Discount factor (based on Cell B5 above) 19 Discounted Milestone Bonus 20 21 Performance Bonus 22 Discount factor (based on Cell BS above) 23 Discounted Performance Bonus 24 25 Monthly Endorsement Contract Payment 26 Discount factor (based on Cell B4 above) 27 Discounted Monthly Endorsement Payment S la no 11.4349 10.4542 11.4349 10.4542 24 25 Monthly Endorsement Contract Payment 26 Discount factor (based on Cell B4 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 Steven's estimate of the value of Flynn'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. It is appropriate and necessary to discount the endorsement contract 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 on the endorsement contract. Steven's estimate of the value of Flynn's contract is incorrect on a nominal basis, and the error is $16,938, Related Question: The local car dealer creating Flynn's endorsement opportunity can earn 6% (compounded quarterly) on his deposited funds. She would have to deposits each quarter, starting exactly two years before the day Flynn 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.]