Martinez Hardy recently rejected a $25,600,000, five-year contract with the Vancouver Seals hockey team. The contract of

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Martinez Hardy recently rejected a $25,600,000, five-yearcontract with the Vancouver Seals hockey team. The contract offercalled for an immediate signing bonus of $9,600,000 and annualpayments of $3,200,000. To sweeten the deal, the president ofplayer personnel for the Seals has now offered a $27,920,000,five-year contract. This contract calls for annual increases and aballoon payment at the end of five years.
Click here to view factor tablesSuppose you are Hardy’s agent and you wish to evaluate the twocontracts using a required rate of return of 15 percent.In present value terms, how much better is the secondcontract? (Round present value factor calculationsto 4 decimal places, e.g. 1.2151 and final answers to 0 decimalplaces, e.g. 125. Enter negative amounts using either a negativesign preceding the number e.g. -45 or parentheses e.g.(45).)
Present value of old contract
Present value of new contract