Question $5.$ Your best friend from high school was just drafted by the Atlanta Braves. Your

friend heard you are in a finance class and asks you to help him evaluate his new player

contract options.

The first option is a $6-$year deal worth $$12$ million dollars. He will receive no signing

bonus, but will receive six equal payments of $$2$ million at the end of years one through

six.

The second option is a five$-$year deal worth $$10$ million. The signing bonus is for $$5$

million, and the rest will be paid out equally over the course of the five years in $$1$

million dollar installments.

a$)$ If the discount rate is $8\mathrm{.}25\%,$ which contract offer gives the most purchasing power in

today's dollars $($assuming the only thing your friend cares about is maximizing his

contract purchasing power$)?$

b$)$ What other financial factors might you discuss with your friend about this contract,

beyond strictly the total purchasing power? Briefly $(1-2$ sentences each$)$ discuss two of

the factors he should consider.

Question $5.$ Your best friend from high school was just drafted by the Atlanta Braves. Your

friend heard you are in a finance class and asks you to help him evaluate his new player

contract options.

The first option is a $6-$year deal worth $$12$ million dollars. He will receive no signing

bonus, but will receive six equal payments of $$2$ million at the end of years one through

six.

The second option is a five$-$year deal worth $$10$ million. The signing bonus is for $$5$

million, and the rest will be paid out equally over the course of the five years in $$1$

million dollar installments.

a$)$ If the discount rate is $8\mathrm{.}25\%,$ which contract offer gives the most purchasing power in

today's dollars $($assuming the only thing your friend cares about is maximizing his

contract purchasing power$)?$

b$)$ What other financial factors might you discuss with your friend about this contract,

beyond strictly the total purchasing power? Briefly $(1-2$ sentences each$)$ discuss two of

the factors he should consider.

Solve in excel if possible