Question

[Related to Solved Problem​ 3.1B] In​ 2015, the Washington Nationals baseball team signed pitcher Max Scherzer to a contract to play for them for seven years. He would be paid​ $15 million dollars per year for 14 years—an additional 7 years beyond the end of the time he would be committed to play for the Nationals. The contract was widely reported as being worth​ $210 million​ (or $15 million per year×14 ​years). One baseball writer​ argued, though, that "this deal serves as a nice reminder that the payment terms of a deal can have an impact on the actual value of the contract." ​Source: Dave​ Cameron, "Max Scherzer and When​ $210 Million​ Isn't $210 ​Million," fangraphs​, January​ 19, 2015. Which of the following statements best represents the actual value of the​ contract? A. The actual value of the contract is more than​ $30 million for each year he plays. B. ​Scherzer's contract is worth​ $210 million on the day he signs it. C. The actual value of the contract is less than​ $30 million for each year he plays. D. The actual value of the contract is​ $30 million for each year he plays. Assume for simplicity that Scherzer receives his​ $15 million per year salaries for​ 2018, 2019, and 2020 at the end of each calendar year. The interest rate for this period of time is​ 7%. The present value of the salaries he will receive for these three years on January​ 1, 2018 is approximately A. ​$41.9 million. B. ​$45 million. C. ​$36.7 million. D. ​$39.4 million.

Answer 1

That’s to long but 30 x 210