In 2000, retiring Mets player Bobby Bonilla was owed $5.9 million on his contract to play for
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In 2000, retiring Mets player Bobby Bonilla was owed $5.9 million on his contract to play for the NY Mets baseball team. Rather than a one-time buyout, however, he and the Mets agreed that Bobby would be paid zero dollars until July 1, 2011. On that day, and on each July 1 thereafter until and including 2035, Bobby would be paid $1,193,248.
- Prepare a simple DCF model in excel to demonstrate the payouts to Bobby and the cost to the NY Mets.
- What is the time value of money that they have both agreed to in this contract?
- Who got the better end of the deal and why? July 1 is Bobby Bonilla Day! The owner of the NY Mets tweeted that this day is his favorite day of the year. Why?
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