Question
Suppose that the players union presented a counterproposal to the owners (and the state). They would agree to a limit on the length of the
Suppose that the players union presented a counterproposal to the owners (and the state). They would agree to a limit on the length of the payments if the owners agreed to include annual cost of living escalators. Continue to use the 10% (compounded semiannually) discount rate and assume that the cost of living would escalate at a 2.75% rate per year. Determine
a. The present value of the teams obligation if they only had to pay Montgomery for four years;
b. The present value of the teams obligation if they only had to pay Montgomery for twenty-two years.
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