A basketball player received a contract from the New York Knicks in which he was offered $5 million a year for ten years.
Determine the present value of the contract on the date of the first payment if the interest rate is 3 % per year, compounded continuously.
Round your answer to two decimal places.
Present value = __________ millions of dollars
PV = 5 e^-.03 + 5 e^-.06 + ... + 5 e^-(10(.03))
I see a GS with
a = 5 e^-.03
r = e^-.03
n = 10
PV = a(r^n - 1)/(r-1)
5 e^-.03( e^-.3 - 1)/(e^-.03 - 1)
= appr 43.85 million dollars