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.

1. Prepare a simple DCF model in excel to demonstrate the payouts to Bobby and the cost to the NY Mets.
2. What is the time value of money that they have both agreed to in this contract?
3. 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?

Answer rating: 100% (QA)

Simple DCF Model Inputs Present value of Bobby Bonillas contract 59 million Number of annual payments 25 Annual payment ... View the full answer