I am having issues with this problem. I have tried to use the present value form

Question

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

Calculate the Present Value:

Explanation / Answer

Contract Value Present Value $    3,250,000.00 $       3,250,000.00 $ 32,000,000.00 $    25,971,917.86 $ 28,000,000.00 $    20,473,358.68 $ 28,000,000.00 $    18,444,467.28 $ 27,000,000.00 $    16,023,185.86 $ 25,000,000.00 $    13,366,020.90 $ 37,000,000.00 $    17,821,361.20 $ 30,000,000.00 $    13,017,794.89 $ 26,000,000.00 $    10,164,044.06 $ 25,000,000.00 $       8,804,611.97 $ 18,750,000.00 $       5,949,062.14 $ 153,285,824.84

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