Gavin Goldenarm has been playing baseball since he was five years old and has always dreamed of playing in the big leagu

Post by **answerhappygod** » Thu May 19, 2022 12:19 am

Gavin Goldenarm 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 Moab Mountain Goats; last year, he was the first
runner-up for the Minor League Player of the Year award. Using his
99 mph fastball, an impeccable curve ball and slider, and a
reliable changeup pitch, he achieved a 18-2 win–loss record, an
earned run average (ERA) of 2.23, and 166 strikeouts in 147.2
innings pitched. He is also your best friend.
Two weeks ago, on his three-year anniversary with the team,
Gavin received the following email from his agent, George
Get-d’Bucks, indicating that he is being called up to the
Springfield Dusties, the Mountain Goats’s corresponding Major
League Baseball (MLB) team. Moreover, Gavin’s contract is being
revised to reflect his new status. The email describes the general
terms and conditions of Gavin’s revised contract.
From: George
Get-d’Bucks
To: Gavin Goldenarm
Subject: New Team, New Contract
Proposal
Gavin,
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:
In addition to the proposal offered by the Dusties, I’ve also
been able to secure the following endorsement opportunity:
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!

: Gavin Goldenarm Has Been Playing Baseball Since He Was Five Years Old And Has Always Dreamed Of Playing In The Big Leagu 1 (381.09 KiB) Viewed 56 times

Contract Evaluation Worksheet Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To clarify possible sources of confusion and simplify your calculations: • Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned. • The endorsement proceeds are paid in accordance with the terms of the deal. • Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, 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. • When entering intermediate values as answer choices, be sure to round them to the nearest dollar, however when using those same values to calculate another answer, do not round.
А 8 D E F 1 Assumptions and Calculated Values 2 Bank Rate Information: 3 9.00% Gavin's Bank Account Rate (compounded monthly) Monthly Bank Rate Effective Annual Interest 4 4 % 5 Rate 6 7 Year 1 Year 2 Year 3 Year 4 Total value Salary and Bonus Information: 8 Annual Salary (4% COLA) S $ $ $ S 9 Monthly Salary $ IS s S 10 Discount factor (based on 11.4349 10.4542 9.5577 8.7380 Cell B4 above) 11 S Discounted Annual Salary $ 12 13 Time-in-League Bonus $ $ 14 0.9562 Discount factor (based on Cell B4 above) Discounted Time-in-League Bonus 15 $ $ 16 $ S 17 Milestone Bonus 0.9142 0.8358 0.7641 0.6986 18 Discount factor (based on Cell B5 above)
19 Discounted Milestone Bonus IS S 20 3 21 Performance Bonus IS S S $ S 22 Discount factor (based on 0.9142 0.8358 0.7641 0.6986 Cell B5 above) 23 3 Is SS Discounted Performance Bonus $ S 24 25 Is Monthly Endorsement Contract Payment IS S 26 Discount factor (based on 11.4349 10.4542 Cell B4 above) 27 $ S ㅋ Discounted Monthly Endorsement Payment 28 29 Contract's Total Nominal $ Value 30 $ Contract's Total Discounted Value 1. Given your worksheet calculations, which of the following statements is accurate? Is George's estimate of the value of Gavin's contract accurate on either a nominal or discounted basis? Check all that apply. George's estimate of the value of Gavin's contract is incorrect on a nominal basis, and the error is $46,938. It is appropriate and necessary to discount the performance bonus 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 for the performance bonus. 0 George's estimate of the nominal value of Gavin's contract is correct.
Unted Performance Bonus 15 24 25 Monthly Endorsement Contract Payment $ $ $ 26 Discount factor (based on 11.4349 10.4542 Cell B4 above) 27 Discounted Monthly Endorsement Payment $ $ $ 28 29 Contract's Total Nominal $ Value 30 Contract's Total Discounted Value s 1. Given your worksheet calculations, which of the following statements is accurate? Is George's estimate of the value of Gavin's contract accurate on either a nominal or discounted basis? Check all that apply. O George's estimate of the value of Gavin's contract is incorrect on a nominal basis, and the error is $46,938. It is appropriate and necessary to discount the performance bonus 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 for the performance bonus. O George's estimate of the nominal value of Gavin's contract is correct. Related Question: The local car dealer creating Gavin's andorsement opportunity can earn 6% (compounded quarterly) on his deposited funds. She would have to deposit $ each quarter, starting exactly two years before the day Gavin signs his contract, to fund her endorsement contract. [Note: The future value interest factor of 6% compounded quarterly for eight quarterly periods is 8.4328.]