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Determine which contract is the best financial deal

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Reference no: EM132479914

Assume that you are an agent for the Seattle Mariner's next superstar and that you are negotiating with a number of major league baseball teams concerning the superstar's next contract. The Mariners are hopeful that the superstar will sign with them and have offered a package containing the following:

  1. Signing Bonus at the start of Year 1: $10,000,000
  2. 7-Year contract paying $12,000,000 per year
  3. A lump-sum payment made at the end of 10 years of $5,000,000

The Los Angeles Dodgers have countered with an attractive package of their own which includes:

  1. Signing Bonus at the start of Year 1: $1,000,000
  2. 7-Year contract paying $15,000,000 per year

REQUIRED:

Question 1. Which contract is the best "financial deal? Explain. Show Computations. Use an interest rate of 10%.

Reference no: EM132479914

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