run average (ERa) of 2.93 , and 146 strikeouts in 117.0 lenings pitched, Hit la was pour bert fiken. reflect his new tatus. The email describes the general terms and condecen of Nicks revised ctontract. From: Marty Fineprint Tos Nick Nohitter Subject: New Team, New Contract Proposel Nick: Congratulations! You've been called up to the E Paso Grandies- Belor are the cifered terms and conditions of your new contract. After vou review them and thick about the offer, call me and well discuss your opelons. Congrats apain! Salary and Incentives: - Nick Nohitter hereafter referred to as the \"Plavee\" is cftered a fout-year contract with an annial salary of 3444,000 per vear, to be paid at the end of each month in the contract teim. - Under the feapue's collective bargaining apreement the Plarer mal recebre a 496 cost-of-living adjustment (COUA) to his annual salarr at the beginning of every other vear. This means that the Plaver's annual salarv mill increase at the beginning of rear 2 and year 4 , as applicable. - In addition, the flaver will recelve a one-time \\( \\$ 20,000 \\) cime ln-leagoe bonus after six menths of participation with an MLis team. This bonus wal be paid immediatelr on completion of the slo-month perioe. - The Plarer is ciffered a performance-based boous, as well as a milesone bonus. Both are intended to encourage outatanding performance. - The Player is cffered the followino award-based performance incentive: a 1596 bonus if he is desionated as the Most valuable Player (MWF) in the league, The Player is also offered the following milestube bocus: a \\( \\$ 250,000 \\) bonus if he ties Nolan fran's 1973 singlt-season stricteot record pa3: strikeouts). - The Plaver is eligible for each potential bonus each vear that the contract is in effect and, if expressed as a percentage, will be based on the value of the Player's base anflual salary for the corresponding veac. If eamed, the performance and milestone bonuses will be distributed in a single parment at the beginning of the next contract vear. Avtough this preposal describes orly coe milestooe, the actual contract confairs several progrestrive mileatones. Exceeding one milestone creates the opocrtunity to ercetd another: 1. Given your worksheet calculations, which of the following statements is accurate? is Marty's estimate of the value of Mick's contract accurate on either a nominal or discounted basis? Check all thet aooly. It is appropriate and necessary to discount the endorsement contract using the bank account's effective annual interest rate because of differences in the timing of the compoundiog of the bark account and that of the payments on the endorsement cantract. Marty's estimate of the value of Nick's contract is incorrect on a nominal basis, and the error is 522.513 . It is appropriate and necessary to discount the performance bonus using the bank account's effective annual interest rate because of differences in the timing of the compounding of the bank account and that of the oayments for the performance bonus. Related Question: The local car dealer crating Nicki endorsement opportunitr can eam es (compounded quarterly) on his deposited funds. She would have to deposit each quarter, starting exactly two vears before the day Niek sighs his contract, to fund her endorsement contract. [Note: The future value interest factor of 60 compounded guartertr for eight quarterly periods is 8.4328.) Nick Nohister's Contract Evaluotion Worksheet In addition to the proposal offered by the Grandies, I've also been able to secure the following endorsement opportunity: A local car dealer has offered you a contract that will pay \\( \\$ 3,000 \\) per month for two years. This contract is contingent on your accepting the contract with the Grandies and will take effect immediately upon signing your MLB contract. In return for these payments, you will participate in the dealer's promotional events, such as signing autographs and allowing photographs as requested. IVe also attached a worksheet that you can use to analyze the deal. \\( I \\mathrm{~m} \\) in negotiations for the rest of the day, so let's discuss your thoughts on the contract proposal tomorrow. I'm proud of youl: Take care, Marty Marty Fineprint Sports Agent, RaR Talent Management Inc. I El Paso Nick is so excited; According to Marty, the contract is worth \\( \\$ 3,122,400 \\)-25suming recept of all possible bonuses. After rereading the email twice a calling his family, Nick called you to review the terms of the contract and verify Marty's calculations. After an extended conversation about what helil do with his newfound wealth, you and Nick have agreed that any funds recelved could be invested to earn \3.00. compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and ansier the related questions. Note: To clarify possible sources of confusion and simplify your calculations: - Assume that all bonuses are eamed in each of the years for which they are avaliable and are pald at the end of the corresponding year(s), unless specifically stated differently, Their value should be based on the salary in effect at the time the bonuses were earned. - The endorsement proceeds are paid in accordance with the terms of the deal. - Riemember that the timino of a cash flow 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 rates are used to discount monthly cash flows. Therefore; it may be necessary to compute the appropriate interent rate that should be used in a discounting calculation. - Round all dollar amounts to the nearest whole doliar and carry out all interest rate factors to four decimal olaces. - When entering intermediate values as answer cholces, be sure to round them to the nearest dolar, however when using these same values to calculate another answer, do not round. run average (ERa) of 2.93 , and 146 strikeouts in 117.0 lenings pitched, Hit la was pour bert fiken. reflect his new tatus. The email describes the general terms and condecen of Nicks revised ctontract. From: Marty Fineprint Tos Nick Nohitter Subject: New Team, New Contract Proposel Nick: Congratulations! You've been called up to the E Paso Grandies- Belor are the cifered terms and conditions of your new contract. After vou review them and thick about the offer, call me and well discuss your opelons. Congrats apain! Salary and Incentives: - Nick Nohitter hereafter referred to as the \"Plavee\" is cftered a fout-year contract with an annial salary of 3444,000 per vear, to be paid at the end of each month in the contract teim. - Under the feapue's collective bargaining apreement the Plarer mal recebre a 496 cost-of-living adjustment (COUA) to his annual salarr at the beginning of every other vear. This means that the Plaver's annual salarv mill increase at the beginning of rear 2 and year 4 , as applicable. - In addition, the flaver will recelve a one-time \\( \\$ 20,000 \\) cime ln-leagoe bonus after six menths of participation with an MLis team. This bonus wal be paid immediatelr on completion of the slo-month perioe. - The Plarer is ciffered a performance-based boous, as well as a milesone bonus. Both are intended to encourage outatanding performance. - The Player is cffered the followino award-based performance incentive: a 1596 bonus if he is desionated as the Most valuable Player (MWF) in the league, The Player is also offered the following milestube bocus: a \\( \\$ 250,000 \\) bonus if he ties Nolan fran's 1973 singlt-season stricteot record pa3: strikeouts). - The Plaver is eligible for each potential bonus each vear that the contract is in effect and, if expressed as a percentage, will be based on the value of the Player's base anflual salary for the corresponding veac. If eamed, the performance and milestone bonuses will be distributed in a single parment at the beginning of the next contract vear. Avtough this preposal describes orly coe milestooe, the actual contract confairs several progrestrive mileatones. Exceeding one milestone creates the opocrtunity to ercetd another: 1. Given your worksheet calculations, which of the following statements is accurate? is Marty's estimate of the value of Mick's contract accurate on either a nominal or discounted basis? Check all thet aooly. It is appropriate and necessary to discount the endorsement contract using the bank account's effective annual interest rate because of differences in the timing of the compoundiog of the bark account and that of the payments on the endorsement cantract. Marty's estimate of the value of Nick's contract is incorrect on a nominal basis, and the error is 522.513 . It is appropriate and necessary to discount the performance bonus using the bank account's effective annual interest rate because of differences in the timing of the compounding of the bank account and that of the oayments for the performance bonus. Related Question: The local car dealer crating Nicki endorsement opportunitr can eam es (compounded quarterly) on his deposited funds. She would have to deposit each quarter, starting exactly two vears before the day Niek sighs his contract, to fund her endorsement contract. [Note: The future value interest factor of 60 compounded guartertr for eight quarterly periods is 8.4328.) Nick Nohister's Contract Evaluotion Worksheet In addition to the proposal offered by the Grandies, I've also been able to secure the following endorsement opportunity: A local car dealer has offered you a contract that will pay \\( \\$ 3,000 \\) per month for two years. This contract is contingent on your accepting the contract with the Grandies and will take effect immediately upon signing your MLB contract. In return for these payments, you will participate in the dealer's promotional events, such as signing autographs and allowing photographs as requested. IVe also attached a worksheet that you can use to analyze the deal. \\( I \\mathrm{~m} \\) in negotiations for the rest of the day, so let's discuss your thoughts on the contract proposal tomorrow. I'm proud of youl: Take care, Marty Marty Fineprint Sports Agent, RaR Talent Management Inc. I El Paso Nick is so excited; According to Marty, the contract is worth \\( \\$ 3,122,400 \\)-25suming recept of all possible bonuses. After rereading the email twice a calling his family, Nick called you to review the terms of the contract and verify Marty's calculations. After an extended conversation about what helil do with his newfound wealth, you and Nick have agreed that any funds recelved could be invested to earn \3.00. compounded monthly. Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and ansier the related questions. Note: To clarify possible sources of confusion and simplify your calculations: - Assume that all bonuses are eamed in each of the years for which they are avaliable and are pald at the end of the corresponding year(s), unless specifically stated differently, Their value should be based on the salary in effect at the time the bonuses were earned. - The endorsement proceeds are paid in accordance with the terms of the deal. - Riemember that the timino of a cash flow 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 rates are used to discount monthly cash flows. Therefore; it may be necessary to compute the appropriate interent rate that should be used in a discounting calculation. - Round all dollar amounts to the nearest whole doliar and carry out all interest rate factors to four decimal olaces. - When entering intermediate values as answer cholces, be sure to round them to the nearest dolar, however when using these same values to calculate another answer, do not round