Fynn Fireballer has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he was a starting pitcher for a double-A (AA)-level baseball team, the Ketchum Baldies; last year, he was the first runner-up for the Minor League Player of the rear award. Using his 96 mph fastball, an impeccable curve ball and slider, and a reliable changeup pitch, he achieved a 163 win-loss record, an earned run average (ERA) of 2.98, and 146 strikeouts in 117.0 innings pitched. He is also your best friend. Two weeks ago, on his three-year anniversary with the team, Flynn received the following email from his agent, Michael Make-d'Team, indicating that he is being called up to the Springfield Dusties, the Baldies's corresponding Major League Baseball (MLB) team. Moreover, Flynn's contract is being revised to reflect his new status. The email describes the general terms and conditions of Flynn's revised contract. From: Michael Make-d'Team To: Flynn Fireballer Subject: New Team, New Contract Proposal Flynn, Congratulations! You've been called up to the Springfield Dusties. Below are the offered terms and conditions of your new contract. After you review them and think about the offer, call me and we'll discuss your options. Congrats again! Salary and Incentives: - Flynn Fireballer hereafter referred to as the "Player," is offered a four-year contract with an annual salary of $474,000 per year, to be paid at the end of each month in the contract term. - Under the league's collective bargaining agreement, the Player will receive a 4% cost-of-living adjustment (COLA) to his annual salary at the beginning of every other year. This means that the Player's annual salary will increase at the beginning of year 2 and year 4 , as applicable. - In addition, the Player will receive a one-time $10,000 time-in-league bonus after six months of participation with an MLB team. This bonus will be paid immediately on completion of the six-month period. - The Player is offered a performance-based bonus, as well as a milestone bonus. Both are intended to encourage outstanding performance. - The Player is offered the following award-based performance incentive: a 15% bonus if he is designated as the Most Valuable Player (MVP) in the league. The Player is also offered the following milestone bonus: a $125,000 bonus if he ties Nolan Ryan's 1973 single-season strikeout record ( 383 strikeouts). - The Player is eligible for each potential bonus each year that the contract is in effect and, if expressed as a percentage, will be based on the value of the Player's base annual salary for the corresponding year. If earned, the performance and milestone bonuses will be distributed in a single payment at the beginning of the next contract year. Although this proposal describes only one milestone, the actual contract contains several progressive milestones. Exceeding one milestone creates the opportunity to exceed another. A local car dealer has offered you a contract that will pay $2,750 per month for two years. This contract is contingent on your accepting the contract with the Dusties and will take effect immediately upon signing your MLB contract. In return for these payments, you will participate in the dealer's promotional events, such as signing autographs and allowing photographs as requested. I've also attached a worksheet that you can use to analyze the deal. I'm in negotiations for the rest of the day, so let's discuss your thoughts on the contract proposal tomorrow. I'm proud of you! Take care, Michael Michael Make-d'Team Sports Agent, R&R Talent Management Inc. I Springfield Iynn is so excited! According to Michael, the contract is worth $2,720,400-assuming receipt of all possible bonuses. After rereading the email twice e'll do with his newfound wealth, you and Flynn have agreed that any funds received could be invested to earn 9.00%, compounded Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer Note: To clarify possible sources of confusion and simplify your calculations: year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the base earned. - The endorsement proceeds are paid in accordance with the terms of the deal. it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. - Round all dollar amounts to the nearest whole dollar and carry out all interest rate factors to four decimal places. values to calculate another answer, do not round. Flynn Fireballer's Contract Evaluation Worksheet 131415Time-in-LeagueBonusDiscountfactor(basedonCellB4above)DiscountedTime-in-League$$0.9562 Bonus 16 24 Endorsement Payment 1. Given your worksheet calculations, which of the following statements is accurate? Is Michael's estimate of the value of Flynn's contract accurate on either a nominal or discounted basis? Check all that apply. It is appropriate and necessary to discount the endorsement contract using the bank account's effective annual interest rate because of differences in the timing of the compounding of the bank account and that of the payments on the endorsement contract. Michael's estimate of the value of Flynn's contract is incorrect on a nominal basis, and the error is $58, 088 . differences in the timing of the compounding of the bank account and that of the payments for the performance bonus. Related Question: The local car dealer creating Flynn's endorsement opportunity can earn 6\% (compounded quarterly) on his deposited funds. She contract. [Note: The future value interest factor of 6% compounded quarterly for eight quarterly periods is 8.4328. Fynn Fireballer has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he was a starting pitcher for a double-A (AA)-level baseball team, the Ketchum Baldies; last year, he was the first runner-up for the Minor League Player of the rear award. Using his 96 mph fastball, an impeccable curve ball and slider, and a reliable changeup pitch, he achieved a 163 win-loss record, an earned run average (ERA) of 2.98, and 146 strikeouts in 117.0 innings pitched. He is also your best friend. Two weeks ago, on his three-year anniversary with the team, Flynn received the following email from his agent, Michael Make-d'Team, indicating that he is being called up to the Springfield Dusties, the Baldies's corresponding Major League Baseball (MLB) team. Moreover, Flynn's contract is being revised to reflect his new status. The email describes the general terms and conditions of Flynn's revised contract. From: Michael Make-d'Team To: Flynn Fireballer Subject: New Team, New Contract Proposal Flynn, Congratulations! You've been called up to the Springfield Dusties. Below are the offered terms and conditions of your new contract. After you review them and think about the offer, call me and we'll discuss your options. Congrats again! Salary and Incentives: - Flynn Fireballer hereafter referred to as the "Player," is offered a four-year contract with an annual salary of $474,000 per year, to be paid at the end of each month in the contract term. - Under the league's collective bargaining agreement, the Player will receive a 4% cost-of-living adjustment (COLA) to his annual salary at the beginning of every other year. This means that the Player's annual salary will increase at the beginning of year 2 and year 4 , as applicable. - In addition, the Player will receive a one-time $10,000 time-in-league bonus after six months of participation with an MLB team. This bonus will be paid immediately on completion of the six-month period. - The Player is offered a performance-based bonus, as well as a milestone bonus. Both are intended to encourage outstanding performance. - The Player is offered the following award-based performance incentive: a 15% bonus if he is designated as the Most Valuable Player (MVP) in the league. The Player is also offered the following milestone bonus: a $125,000 bonus if he ties Nolan Ryan's 1973 single-season strikeout record ( 383 strikeouts). - The Player is eligible for each potential bonus each year that the contract is in effect and, if expressed as a percentage, will be based on the value of the Player's base annual salary for the corresponding year. If earned, the performance and milestone bonuses will be distributed in a single payment at the beginning of the next contract year. Although this proposal describes only one milestone, the actual contract contains several progressive milestones. Exceeding one milestone creates the opportunity to exceed another. A local car dealer has offered you a contract that will pay $2,750 per month for two years. This contract is contingent on your accepting the contract with the Dusties and will take effect immediately upon signing your MLB contract. In return for these payments, you will participate in the dealer's promotional events, such as signing autographs and allowing photographs as requested. I've also attached a worksheet that you can use to analyze the deal. I'm in negotiations for the rest of the day, so let's discuss your thoughts on the contract proposal tomorrow. I'm proud of you! Take care, Michael Michael Make-d'Team Sports Agent, R&R Talent Management Inc. I Springfield Iynn is so excited! According to Michael, the contract is worth $2,720,400-assuming receipt of all possible bonuses. After rereading the email twice e'll do with his newfound wealth, you and Flynn have agreed that any funds received could be invested to earn 9.00%, compounded Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer Note: To clarify possible sources of confusion and simplify your calculations: year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the base earned. - The endorsement proceeds are paid in accordance with the terms of the deal. it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation. - Round all dollar amounts to the nearest whole dollar and carry out all interest rate factors to four decimal places. values to calculate another answer, do not round. Flynn Fireballer's Contract Evaluation Worksheet 131415Time-in-LeagueBonusDiscountfactor(basedonCellB4above)DiscountedTime-in-League$$0.9562 Bonus 16 24 Endorsement Payment 1. Given your worksheet calculations, which of the following statements is accurate? Is Michael's estimate of the value of Flynn's contract accurate on either a nominal or discounted basis? Check all that apply. It is appropriate and necessary to discount the endorsement contract using the bank account's effective annual interest rate because of differences in the timing of the compounding of the bank account and that of the payments on the endorsement contract. Michael's estimate of the value of Flynn's contract is incorrect on a nominal basis, and the error is $58, 088 . differences in the timing of the compounding of the bank account and that of the payments for the performance bonus. Related Question: The local car dealer creating Flynn's endorsement opportunity can earn 6\% (compounded quarterly) on his deposited funds. She contract. [Note: The future value interest factor of 6% compounded quarterly for eight quarterly periods is 8.4328