Homework Help: Economics

Posted by Regina on Saturday, January 24, 2009 at 11:26am.

Jim signed a new deal for $10 million with the Toronto maple leafs. THe terms of the contract were 1 million immediately and 800,000 per year for the next 5 years (first payment after 1 year) and $1 million per year for the next 5 years (first payment at year 6). If jim's interest rate is 8% per year, how much is his contract worth at the time of the signing?

Economics - economyst, Monday, January 26, 2009 at 9:10am
An Excel spreadsheet is very helpful for these types of calculations.

(in thousands for brevity):
PV = 1000 + 800/(1.08) + 800/1.08)^2 + 800/(1.08)^3 + .... 1000/(1.08)^10

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