Pearl Hardy recently rejected a $20,013,000, five-year contract with the Vancouver Seals hockey team. The contract offer called for an immediate signing bonus of $7,613,000 and annual payments of $2,480,000. To sweeten the deal, the president of player personnel for the Seals has now offered a $22,048,000, five-year contract. This contract calls for annual increases and a balloon payment at the end of 5 years.

Year 1$2,539,000Year 22,652,000Year 32,659,000Year 42,813,000Year 52,952,000Year 5 balloon payment8,433,000Total$22,048,000

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Suppose you are Hardy's agent and you wish to evaluate the two contracts using a required rate of return of 13 percent. 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

Present value of new contract

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