The player's annual salary (in millions of dollars), using the present value calculations, is <u>$1.89743 million</u>.
<h3>What is the present value?</h3>
The present value of the player's future cash flows (salaries) is the current value or the value in today's dollars. It is computed by discounting the future values at the appropriate discount rate.
The present value can be computed using the Present Value formula, an online finance calculator, or the PV factor table.
Formula
PV = FV \frac{1}{(1+r)^{n}}
Where:
PV = present value
FV = future value
r = rate of return
{n} = number of periods
<h3>Data and Calculations:</h3>
Discount rate = 10%
Period of salary = 5 years
Period Cash Flows PV Factor Present Value
Year 1: $1.40 million 0.909 $1,272,600 ($1.4 x 0.909)
Year 2: $1.51 million 0.826 1,247,260 ($1.51 x 0.826)
Year 3: $2.25 million 0.751 1,689,750 ($2.25 x 0.751)
Year 4: $2.59 million 0.683 1,768,970 ($2.59 x 0.683)
Year 5: $3.17 million 0.621 1,968,570 ($3.17 x 0.621)
Additional present value required 1,540,000
Total present value = $9,287,150
Annual salary (in millions of dollars) = $1.89743 million ($9,287,150/5).
Thus, the player's annual salary (in millions of dollars) is <u>$1.89743 million</u>.
Learn more about present value calculations at brainly.com/question/20813161
