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Use formulae and not excel Today is January 1 , 2 0 2 4 . Your friend Joe has just signed a contrac t to

Use formulae and not excel
Today is January 1,2024. Your friend Joe has just signed a contrac
t to play for a baseball team. He will receive
$900,000 for 2024, $1,000,000 for 2025, $1,100,000 for 2026, and $1,200,000 for 2027. All payments are made at
the beginning of the year. Assume 8% annual interest rate (EAR).
a. What is the present value of his contract?
b. If instead of increasing annual payments Joe wants equal dollar amount month-end cheques, how large is
his monthly pay (assuming the present value remains the same)?

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