A baseball player is offered a 5-year contract that pays him the following amounts:

Year 1: $1.2 million
Year 2: 1.6 million
Year 3: 2.0 million
Year 4: 2.4 million
Year 5: 2.8 million

Instead of accepting the contract, the baseball player asks his agent to negotiate a contract which has a present value of $1 million more than that which has been offered. Moreover, the player wants to receive his payments in the form of a 5-year annuity due. All cash flows are discounted at 10 percent. If the team were to agree to the player's terms, what would be the player's annual salary (in millions of dollars)?

The player's annual salary is $2 million. If All cash flows are discounted at 10 percent. If the team were to agree to the player's terms.

A stream of identical future payments is worth in dollars today what is known as the present value of an annuity. To put it another way, it's the sum of the investments you would need to make today to equal the total of the annuity payments after accounting for the time value of money.

Given,

Cash Flow(CF)      Year 1            Year 2     Year 3      Year 4      Year 5

(Amt in million)       $1.2               $1.6         $2.0        $2.4           $2.8

Discounted rate = 10%

Additional cash Inflow = $1 million

Required to find annual salary =?

First, we have to find the Present value = CF1/(1+r)¹ + CF2/(1 + r)² + CF3/(1+r)³ + CF4/(1+r)⁴ + CF5/(1+r)⁵

Present value = 1.2/(1+0.1)¹ + 1.6/(1+0.1)² + 2/(1+0.1)³ + 2.4/(1+0.1)⁴ + 2.8/(1+0.1)⁵

Present Value = 7.293 million

Now Increase Pv by 1 million + 7.293 = 8.293 million.

PMT = (PV)/(1+r)*(1-(1/(1+r)ⁿ)) x (1+r)

PMT = 8.293/(1/0.1) x (1-(1/(1+0.1)⁵)) x (1+0.1)

PMT = 1.98 which is 2.0 million approx.

Thus, The player's annual salary is $2 million.

Learn more about Annuity value here:

https://brainly.com/question/13369387

#SPJ2

Consider again the price control described in the last question. Let's assume that the price control
was binding
Now people vote to repeal the law and remove the price control. As the market adjusts afterward,
we'd expect to see quantity demanded [Select ]
- and quantity supplied
in the market for wheat.
[Select ]
fall
remain constant
rise

The case mentions that CEO Barra is inclusive and consults with others, but is not afraid to make hard decisions, when necessary. If Barra was to blame those she consulted with for decisions that turned out wrong, but took credit for decisions that turned out right, she would be suffering from the ______.

Organic Grocer employed Jacobson as its manager and gave her authority to purchase supplies and goods for resale. Jacobson had business dealings with Acme Electronics Company. Jacobson contacted Acme and had it deliver a color television set to her house. She told Acme that the set was to be used in promotional activities. The promotional campaign did not take place, and Jacobson disappeared from the area, taking the television set with her. Acme now seeks to recover the purchase price of the set from Organic Grocer. Will Acme prevail?

what happens to the price of a good or service when a shortage of that good or service occurs?