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We Should have practiced harder... In 1993, Barry Bonds signed the largest contract ever in...

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We Should have practiced harder... In 1993, Barry Bonds signed the largest contract ever in Major League Baseball. It is a six year contract that totals $43.75 million. The contract breaks down like this: Signing Bonus 1993 Salary 2,500,000 4,000,000 4,750,000 7,750,000 1994 1995 8,000,000 8,250,000 8,500,000 1996 1997 1998 Assume that salary payment are paid in a lump sum at the end of the year and an interest rate of 8%. Remember, a signing bonus is paid immediately, so the PVfactor is 1.0000. What is the sum of the discounted cash flows from the contract? Should Barry take a single immediate cash payment of $34,000,000 instead of the contract? What if Barry was offered a contract that included a signing bonus of 2,500,000 and equal annual payment for the balance of the $43,750,000. Should he take this second contract or the $34,000,000 single cash payment? Show your calculations

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