a professional soccer player, is offered a 5-year contract that pays him the following amounts: Year 1: $1.2 million Year 2: 1.6 million Year 3: 2.0 million Year 4: 2.4 million Year 5: 2.8 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, Modrici asks his agent to negotiate a contract that has a present value of $1 million more than that which has been offered. Moreover, Modrici wants to receive his payments in the form of a 5-year annuity due. All cash flows are discounted at 8 percent. If the team were to agree to Modrici’s terms, what would be Modrici’s annual salary (in millions of dollars)?

a professional soccer player, is offered a 5-year contract that pays him the following amounts: Year 1: $1.2 million Year 2: 1.6 million Year 3: 2.0 million Year 4: 2.4 million Year 5: 2.8 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, Modrici asks his agent to negotiate a contract that has a present value of $1 million more than that which has been offered. Moreover, Modrici wants to receive his payments in the form of a 5-year annuity due. All cash flows are discounted at 8 percent. If the team were to agree to Modrici’s terms, what would be Modrici’s annual salary (in millions of dollars)?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 49P

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