What is the present value at the beginning of 2010

Assignment Help Financial Management

Reference no: EM131305523

In 2010, Aroldis Chapman, a baseball player who had defected from Cuba, signed a contract with the Cincinnati Reds. According to baseball writer Keith Law: The Reds heavily backloaded the deal, with Chapman earning just $1 million in 2010 and the full $30 million spread out over the next 10 years. It's not a great structure for the player, because a dollar today is worth more than a dollar next year.

a. Why is a dollar today worth more than a dollar next year?

b. One clause of Chapman's contract called for the Reds to pay him $5 million in 2013. Assuming an interest rate of 10%, what is the present value at the beginning of 2010 of a $5 million payment Chapman would receive at the end of 2013?

Reference no: EM131305523

Questions Cloud

Discuss who would gain and who would lose from legislation : Suppose that Congress changes the law to require all firms to accept paper currency in exchange for whatever they are selling. Briefly discuss who would gain and who would lose from this legislation.

Gulf regional legal environment of business : GHL4010 - Sort out the key points from your gathered data and give a clear summary of the facts that you have gathered (and not elsewhere) with a convincing interpretations of the sorted facts.

Which will pay an interest rate : Which will pay an interest rate of 8% the first year, 5% the second year, and 3% the third year Which CD should you choose?

Which is the best investment : We have a third CD in which you might invest-one that pays an interest rate of 3% the first two years and an interest rate of 7% the third year. How does the future value of this investment compare to the other two? Which is the best investment?

What is the present value at the beginning of 2010 : Assuming an interest rate of 10%, what is the present value at the beginning of 2010 of a $5 million payment Chapman would receive at the end of 2013?

Determine the average mass-transfer convective coefficient : Determine the average mass-transfer convective coefficient and the solvent evaporation rate from the surface in g/min, assuming that the concentration of the solvent vapor in the bulk gas is very small.

The salary for the season ending in 2014 : His salaries in future years under the contract extension would be as follows:- Newspapers reported that the contract extension had a value of $85 million. Were they correct? Briefly explain.

Examine the risk report of five different countries : Visit the website, http://www3.ambest.com/ratings/cr/crisk.aspx hosted by A.M. Best. Examine the risk report of five different countries on at least 3 different continents. Discuss the different sources of risk in these countries

Determine the length of time the sheets must be exposed : Determine the length of time the sheets must be exposed until half of their mass will be sublimed under these conditions.

User Account

All Pages