Hsiry, Congratulationat Youve been called up to the el paso Grandert. Below are the offered terms and conditions of your hew contract. Anet you revew them and think about the offer, call me and we di dilass your options. Congrats againt Salery and Incemives? - Harny Hurier hereaher referred to is the "Player, "is elfered a four-year. contract with an annubl salary of $594,000 per yeer, to be puld at the end of. each month in the contract term. - Under the leaguer colective bargaining agreement, the Fiver nill receve a 4W cost-of iling adjustment (COLA) to his annual salary at the beginning of every other year. This meane that the Payer's anhual salary =f increase at the beginning of year 2 and year 4 , as applicable. - In addition, the Player will recelve a obe-time \$15,000 time-in-leaque bonus after ciax months of partiopation wath an Min team. This borse mill be paid immedlatey on completion of the six-month period. - The mayer is offered a performance-based boncs, as weit as a in lestone bonus. Both are intended to encourage outstanding performance. - The Pisyer is offered the following award-based performance incentive: a 15% bonus payable at the end of the operating yeac if he in seiected to piay in the Al-star game. The Flayer is alse offered the following mileitsone bonus: a 5250,000 bonus it he ties Nolan Ayan's 1973 shole-season strikeout record (383 strikesuts). - The Pisyer is eligible for each potential bonun each year that the contract in In effect and, If expressed as a peroentage, wal be based on the value of the Mayer's base annual salary for the corretponding year. If carned, the performance and milestone bonuses will be diatributed in a single poyment at the beginning of the next contract year. Although this proposal describes only one millestone, the actuel contract contains several progressive milestones. Exceeding one milestone ertates the opportunity to excend another, In addation to the proposal offered by the Grandies, Fve dbo been abie to secure the follewing endorsement opportunity: A local car dealer has offered you a cestract ihat will pay $2,759 per month for two years. This contract is contingent on your accepting the contract with the Grandies and will take effect immediate fson signing your pus contract. In return for these poyments, you wil particpate in the dealer's promotional events, such as signing butographs and alowing photographs as requested. Tve alss attached a worksheet that you can use to analyze the dea. In in negotiations for the rest of the day, so let's discuss your thoughts on the cootract proposal tomorrow. I'm proud of youl Toke care, George George Gef-d bucks Sparts Agent, RAR Talent Monagement Inc I EI Pass 16. Application of Time Value of Money Skilis Hamy Hurler 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 99 mph fastball, an impeccable curve ball and slider, and a reliable changeup pitch, he achieved a 182 win-loss record, an earned run average (ERA) of 2.23, and 166 strikeouts in 147.2 innings pitched. He is also your best friend. Two weeks ago, on his three-year anniversary with the team, Harry received the following email from his agent, George Get-d Bucks, indicating that he is being called up to the El Faso Grandies, the Mountain Goats's corresponding Major League Baseball (MLD) team. Moreover, Harry's contract is being revised to reflect his new status. The email describes the general terms and conditions of Harry's revised contract. Harry is so exeitedl Acoording to George, the contract is worth $3,792,400-assuming receipt af all possible bonuses. After rereading the email twice and calling his famlly, Harry called you to review the terms of the contract and verify George's calculations. After an extended conversation about what he'll do with his newfound wealth, you and Harry have agreed that any funds received could be invested to earn 8.00, compounded inonthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the reiated questions. Notei 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 saiary in effect at the time the bonuses were earned. - The endorsement proceeds are paid in accordance with the terme of the deal. - Remember that the timing of a cash how 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 fates 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 cholces, be sure to round them to the nearest dollar, however when using those same values to calculate another answer, do not round. Marry bueler'a Centrect Cwalustien weakeheot A Munnetient and Colrubated Ynhin Eank Aate Infareation: 3. Mary' i llavi Mericust Mate (an nepecidit moitip) 4. Horidily Bara ale 3. fHectipt Ahtuat miterat? Iate c (i) Cef at asevel 11 Deocsumend Arrat tlathy 13 Tiesthrinbtie Bores It Pocment hictor foithte on: Cwill ais expe) 15. Dscounted Timerio-tagene Bywina Fetal wables le. Ducouthed robtitine Borus either a numinat er disceseted butis p Check af chat daply