Ami, a professional soccer player, is offered a 5-year contract that pays him the following amounts: Year 1: $1.2 million Year 2: 1.6 million Year 3: 2.0 million Year 4: 2.4 million Year 5: 2.8 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, Ami asks his agent to negotiate a contract that has a present value of $1 million more than that which has been offered. Moreover, Ami wants to receive his payments in the form of a 5-year annuity due. All cash flows are discounted at 8 percent. If the team were to agree to Ami’s terms, what would be Ami's annual salary (in millions of dollars)? (Answer must have step by step explainations.)
Ami, a professional soccer player, is offered a 5-year contract that pays him the following amounts:
Year 1: $1.2 million
Year 2: 1.6 million
Year 3: 2.0 million
Year 4: 2.4 million
Year 5: 2.8 million
Under the terms of the agreement all payments are made at the end of each year.
Instead of accepting the contract, Ami asks his agent to negotiate a contract that has a present value of $1 million more than that which has been offered. Moreover, Ami wants to receive his payments in the form of a 5-year
(Answer must have step by step explainations.)
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