PROBLEM #1_________(10 PTS.) Assume that you are an agent for the Seattle Mariner’s next superstar and that you are negotiating with a number of major league baseball teams concerning the superstar’s next contract. The Mariners are hopeful that the superstar will sign with them and have offered a package containing the following:- Signing Bonus at the start of Year 1: $10,000,000 -7-Year contract paying $12,000,000 per year -A lump-sum payment made at the end of 10 years of $5,000,000
The Los Angeles Dodgers have countered with an attractive package of their own which includes:-Signing Bonus at the start of Year 1: $1,000,000 -7-Year contract paying $15,000,000 per yearREQUIRED:1. Which contract is the best “financial deal?
Explain. Show Computations. Use an interest rate of 10%.