A football player signed an $11 million 10 year contract package with a football team he joined recently. Based on this contract, the football player will receive the following benefits; his yearly salaries start at $300,000 and go up yearly to $400,000, $500,000, $600,000, $700,000, $1 million, $1.1 million, $1.2 million, $1.3 million and finally to $1.4 million in the 10th year. Asides his salary, a $2.5 million bonus is available that will pay him $500,000 immediately and $500,000 each year from the 11th year to the 14th year. Calculate the total present worth of the salaries and bonuses if the prevailing interest rate is 8% compounded per year. Did the footballer get the value of his contract?

Answer rating: 100% (QA)

To calculate the total present worth of the salaries and bonuses over the 10year contract period and ... View the full answer