3.37 Recently, Matt Ryan, an NFL quarterback, agreed to a five-year, $103.75 mil
ID: 2729699 • Letter: 3
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3.37 Recently, Matt Ryan, an NFL quarterback, agreed to a five-year, $103.75 million contract extension with the Atlanta Falcons, which made him one of the high est-paid players in professional football history. The contract consisted of a $30 million signing bonus and average annual salary of $20.75 million. The $30 mil- lion signing bonus was pro-rated over the course of the contract, in such that $2 million was paid upfront and remaining balance over the five-year contract period. The detail breakdown of the contract is as follows: Year 2013 2014 2015 2016 2017 2018 Base 2,000,000 9,500,000 11,500,000 15,750,000 15,750,000 19,250,000 Signing Bonus $7,600,000 5,600,000 5,600,000 5,600,000 5,600,000Explanation / Answer
Year Base Signing Bonus Total PVF @ 6% Present Value 0 2013 $ 2,000,000 $ 7,600,000 $ 9,600,000 1 $ 9,600,000 1 2014 $ 9,500,000 $ 5,600,000 $ 15,100,000 0.943396226 $ 14,245,283 2 2015 $ 11,500,000 $ 5,600,000 $ 17,100,000 0.88999644 $ 15,218,939 3 2016 $ 15,750,000 $ 5,600,000 $ 21,350,000 0.839619283 $ 17,925,872 4 2017 $ 15,750,000 $ 5,600,000 $ 21,350,000 0.792093663 $ 16,911,200 5 2018 $ 19,250,000 $ 19,250,000 0.747258173 $ 14,384,720 $ 88,286,013 Actual Worth Year Base Signing Bonus Total PVF @ 6% Present Value 0 2013 $ 2,000,000 $ 25,000,000 $ 27,000,000 1 $ 27,000,000 1 2014 $ 9,500,000 $ 9,500,000 0.943396226 $ 8,962,264 2 2015 $ 11,500,000 $ 11,500,000 0.88999644 $ 10,234,959 3 2016 $ 15,750,000 $ 15,750,000 0.839619283 $ 13,224,004 4 2017 $ 15,750,000 $ 15,750,000 0.792093663 $ 12,475,475 5 2018 $ 19,250,000 $ 19,250,000 0.747258173 $ 14,384,720 $ 86,281,422 Actual Worth Conclusion: No He should not opt for lump sum
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