Today is January 1, 2021, and your friend Arnold Armstrong signs a 4-year contract to play for a minor league football team. He will receive $300,000 for 2021, $400,000 for 2022, $500,000 for 2023, and $600,000 for 2024. All payments are made at the end of year. Assume 5% annual interest rate (EAR).

a.What is the present value of his contract?

b.If instead of annual payments he wants equal dollar amount month-end cheques over his contract period, starting January 31, 2021, how large is his monthly pay?