Reference no: EM131625328

A baseball player is offered a 5-year contract which pays him the following amounts at the end of each year: Year1: $0.9 million; Year 2: $1.2 million; Year 3: $1.5 million; Year 4: $1.8 million; and Year 5: $1.8 million. Instead of accept- ing the contract, the player asks for a contract that, in present-value terms, is worth $0.75 million more than what’s been offered. In addition, the player’s counter-offer asks for five equal payments in the form of an annuity due. As- sume that the appropriate discount rate is 10%/year. If the team were to agree with the player’s counter-offer, what would be the player’s salary per year?