20.21

A baseball player is offered a 5-year contract that pays him the following amounts: Year 1: $1.06 million Year 2: $1.96 million Year 3: $2.40 million Year 4: $2.73 million Year 5: $3.04 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.57 million more than that which has been offered. Moreover, the player wants to receive his payments in the form of a 5-year ANNUITY DUE. All cash flows are discounted at 12.00 percent. If the team were to agree to the player's terms, what would be the player's annual salary (in millions of dollars)? (Express answer in millions. $1,000,000 would be 1.00) Submit Answer format: Currency: Round to: 4 decimal places. A young graduate is saving for house on Lake Hartwell. The young graduate is planning on saving $1,431.00 each quarter for 14.00 years in an investment account paying 8.12% interest that is compounded quarterly. His first deposit will be made at the end of the next quarter, so this is a regular annuity. In 14.00 years, he also plans on being able to afford a 15-year mortgage with $1,628.00 monthly payments at a 5.64% APR interest rate. Given the graduate's plans, how expensive of a lake house will he expect to be able to purchase? (assume that the house price will be the value of the savings and the loan) Submit Answer format: Currency: Round to: 2 decimal places