Question 7 of 10 Question 7 of 10 View Policies Current Attempt in Progress Pearl Hardy recently

Question 7 of 10

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Question 7 of 10 View Policies Current Attempt in Progress Pearl Hardy recently rejected a $ 16,400,000, five-year contract with the Vancouver Seals hockey team. The contract offer called for an immediate signing bonus of $ 6,150,000 and annual payments of $ 2,050,000. To sweeten the deal, the president of player personnel for the Seals has now offered a $ 18,030,000, five-year contract. This contract calls for annual increases and a balloon payment at the end of five years. Year 1 Year 2 Year 3 Year 4 Year 5 Year 5 balloon payment Total Click here to view factor tables Suppose you are Hardy's agent and you wish to evaluate the two contracts using a required rate of return of 15 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 O decimal places, e.g. 125. Enter nqative amounts using either a negative stn preceding the number e.g. -45 or parentheses e.g. Present value of old contract Present value of new contract In present value terms, the second contract is than the old one.

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