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Value of his contract today

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Reference no: EM133122875

The Atlanta Braves signed an outfielder to a five-year contract. The contract calls for the following cash flows:

  • a signing bonus of $4.00 million today,
  • $12.26 million in year 1,
  • $13.17 million in year 2,
  • $14.07 million in year 3,
  • $15.09 million in year 4, and
  • $16.26 million in year 5.

If the outfielder has a discount rate of 5.00% per year, what is the value of his contract today (in millions)? (Express answer in millions. $1,000,000 would be 1.00)

Reference no: EM133122875

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