MartinezHardy recently rejected a $18,800,000, five-year contract with the Vancouver Seals hockey team. The contract offer called for an immediate signing bonus of $7,050,000and annual payments of $2,350,000. To sweeten the deal, the president of player personnel for the Seals has now offered a $20,610,000, five-year contract. This contract calls for annual increases and a balloon payment at the end of five years.

Year 1 $2,350,000

Year 2 2,430,000

Year 3 2,510,000

Year 4 2,590,000

Year 5 2,740,000

Year 5 balloon payment 7,990,000

_______________

Total $20,610,000

Suppose you are Hardy's agent and you wish to evaluate the two contracts using a required rate of return of15percent. In present value terms, how much better is the second contract?(Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answers to 0 decimal places, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Present value of old contract ____________ (enter a dollar amount)

Present value of new contract ____________ (enter a dollar amount)

In present value terms, the second contract isbetterot better than the old one.