What is the difference in the present value of two offers

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Reference no: EM132629172

A baseball player is offered a 3-year contract which pays him the following amounts at the end of each year:

Year 1: $6 million

Year 2: $8 million

Year 3: $10 million

Instead of accepting the contract, the player asks for a contract that has the team paying the same total amount, but payments are equal ($8 million a year) and come at the beginning of each year for the 3 years (3 total payments). Assuming that the appropriate discount rate is 8% per year, what is the difference in the present value of two offers?

Reference no: EM132629172

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