I am having issues with this problem. I have tried to use the present value formula but I seem to be confused because of the immediate up front payment. Please
explain how to get the answer. Thanks in advance
Assume in 2007 an athelete signed a contract reported to be worth $280 million. The contract called for $3.25 million immediately and $32 million in 2008. The
remaining $244.75 million was to be paid as $28 million in 2009 $28 million in 2010 $27 million in 2011 $25 million in 2012 $37 million in 2013 $30
million in 2014 $26 million in 2015 $25 million in 2016 and $18.75 million in 2017.
If the appropriate interest rate is 11 percent what kind of deal did the athelete snag? Assume all payments other than the first $3.25 million are paid at the
end of the year