How much does the baseball team need to deposit

Assignment Help Financial Management

Reference no: EM131625263

A professional baseball player signs a contract for $160 million to play with a team for 7 years. He and his team agree that the contract will be spread out so that the player is paid beyond the 7 years. The payment plan for the contract is as follows:

$18 million each year for years 1 through 7.

$3.1 million each year for the next 8 years.

$1.4 million each year for the next 4 years.

You should assume that the baseball team will pay the player annually at the end of each year and that he will receive the first $18 million at the end of the first year. The player receives money for 19 years.

If the interest rate is 4.7% compounded annually, how much does the baseball team need to deposit in year 0 in order to fully fund this contract? Express your answer in millions of dollars.

Reference no: EM131625263

Questions Cloud

Calculate return on your investment in percent : Calculate the return on your investment in percent. Ignore interest, taxes, and commissions.

Labor savings and depreciation tax savings : would also last for 10 years and would produce after tax flows (labor savings and depreciation tax savings) of $19,000 per year.

What is the additional cash flow in year three : What is the Year-0 net cash flow? What is the additional (nonoperating) cash flow in year 3?

Annual social cost of the fossil fuel the solar system : Suppose we determine that the annual social cost of the fossil fuel the solar system displaces is 40% of its market price.

How much does the baseball team need to deposit : If the interest rate is 4.7% compounded annually, how much does the baseball team need to deposit in year 0 in order to fully fund this contract?

Use straight-line depreciation for the expansion project : What would the depreciation expense be each year under each method? Why might Wendy’s boss prefer straight-line depreciation?

Exhibit low correlations of return with overall stock market : Identify at least one type of firm that might exhibit low correlations of returns with the overall stock market?

Type of an application to be consider for approval : Briefly but clearly explain six general Requirement you need for such type of an application to be consider for approval.

Underline the environment within which a bank customer : There are various models and techniques, which one can be use to underline the environment within which a bank customer can operate.

User Account

All Pages