What is the difference in the present value of two offers

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Reference no: EM133344273

Question: A baseball player is offered a 5-year, $50 million 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 Year 4:$12 million Year 5: $14 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 ($10 million a year) and come at the beginning of each year for the 5 years instead of the end of the year (5 total payments). Assuming that the appropriate discount rate is 6% per year, what is the difference in the present value of two offers?

Reference no: EM133344273

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