Question

The contract signed in February 2018 by Jimmy Garoppolo that we discussed at the beginning of the chapter was actually paid as a $35 million signing bonus to be paid immediately and a $7.6 million salary for 2018. The remaining salary was $18.6 million in 2019, $25.2 million in 2020, $25.5 million in 2021, and $25.6 million in 2022. If the appropriate interest rate is 11 percent, what kind of deal did the quarterback toss? Assume all payments other than the first $35 million are paid at the end of each year

Answer 1

Based on the interest rate given, the deal that was tossed by the quarterback will be $107.36 million.

What is an interest rate?

It should be noted that an interest rate simply means the amount that's charged by a lender. It's a percentage of the principal.

In this case, since the interest rate has been given, the kind of deal that was tossed will be:

= (3.5 + 7.6/1.11) + 18.6)1.11² + 25.2/1.11³ + 25.5)/1.11⁴ + 25.6/1.685

= 107.34 million

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