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Flynn Fireballer has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season,

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Flynn Fireballer 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 Ketchum Baldies; last year, he was the first runner-up for the Minor League Player of the Year award. Using his 93 mph fastball, an impeccable curve ball and slider, and a reliable changeup pitch, he achieved a 15-2 win-loss record, an earned run average (ERA) of 2.76, and 123 strikeouts in 99.1 innings pitched. He is also your best friend. Two weeks ago, on his three-year anniversary with the team, Flynn received the following email from his agent, Noah Never-Enough, indicating that he is being called up to the Springfield Dusties, the Baldies's corresponding Major League Baseball (MLB) team. Moreover, Flynn's contract is being revised to reflect his new status. The email describes the general terms and conditions of Flynn's revised contract. 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 Dusties, I've also been able to secure the following endorsement opportunity: A local car dealer has offered you a contract that will pay $2,750 per month for two years. This contract is contingent on your accepting the contract with the Dusties and will take effect immediately upon signing your MLB contract. In return for these navments you will particinate in the dealer's promotional Flynn is so excited! According to Noah, the contract is worth $3,154,400-assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Flynn called you to review the terms of the contract and verify Noah's calculations. After an extended conversation about what he'll do with his newfound wealth, you and Flynn have agreed that any funds received could be invested to earn 7.50%, 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 interes 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 ^ B C D 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 ls 6 7 Salary and Bonus Year 1 Year 2 Year 3. Year 4 Total value Information: 8 Annual Salary (4% COLA) $ 9 Monthly Salary $ $1 10 Discount factor (based on 11.526392047 10.69603134 Cell B4 above) 11 Discounted Annual Salary S 12 13 Time-in-League Bonus ks 14 Discount factor (based on 0.9633 Cell B4 above) 15 Discounted Time-in-League Bonus $ $ $ 9.925489771 9.210457981230 0.9280 0.8611 0.7991 0.7415 16 17 Milestone Bonus 18 Discount factor (based on Cell BS above) 19 Discounted Milestone Bonus S 201 21 Performance Bonus 22 Discount factor (based on 0.9280

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