Casemirinho has just been offered a contract by Melbourne FC as the most expensive player in...
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Casemirinho has just been offered a contract by Melbourne FC as the most expensive player in Australia. As part of his compensation he has the option to either receive payment as a lump-sum (with bonus) or annual salary (without bonus) with a given discount rate of 7%. The details are below: a. One off lump-sum payment received today worth $6,000,000. Further, Melbourne FC will also provide him with an annual stipend as royalty bonus worth $200,000 for the next 5 years (paid at the end of the year). b. Annual payment of $1,750,000 for the next 5 years (paid at the beginning of the year) and without any royalty bonus. REQUIRED: Advise Casemirinho on which compensation package is the best for him (show all workings). Casemirinho has just been offered a contract by Melbourne FC as the most expensive player in Australia. As part of his compensation he has the option to either receive payment as a lump-sum (with bonus) or annual salary (without bonus) with a given discount rate of 7%. The details are below: a. One off lump-sum payment received today worth $6,000,000. Further, Melbourne FC will also provide him with an annual stipend as royalty bonus worth $200,000 for the next 5 years (paid at the end of the year). b. Annual payment of $1,750,000 for the next 5 years (paid at the beginning of the year) and without any royalty bonus. REQUIRED: Advise Casemirinho on which compensation package is the best for him (show all workings).
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