# Contract Evaluation Sheet

## Contract Evaluation Sheet

Flynn Fireballer has been playing baseball since he was five years old and has always dreamed of playing in the big leagues. Last season, he was a starting pitcher for a double-A (AA)-level baseball team, the Ketchum Baldies; last year, he was the first runner-up for the Minor League Player of the Year award. Using his 99 mph fastball, an impeccable curveball and slider, and a reliable changeup pitch, he achieved a 18-2 win–loss record, an earned run average (ERA) of 2.23, and 166 strikeouts in 147.2 innings pitched. He is also your best friend.

Two weeks ago, on his three-year anniversary with the team, Flynn received the following email from his agent, Noah Never-Enough, indicating that he is being called up to the Springfield Dusties, the Baldies’s corresponding Major League Baseball (MLB) team. Moreover, Flynn’s contract is being revised to reflect his new status. The email describes the general terms and conditions of Flynn’s revised contract.

Flynn is so excited! According to Noah, the contract is worth \$2,382,400—assuming receipt of all possible bonuses. After rereading the email twice and calling his family, Flynn called you to review the terms of the contract and verify Noah’s calculations. After an extended conversation about what he’ll do with his newfound wealth, you and Flynn have agreed that any funds received could be invested to earn 6.00%, compounded monthly.

Contract Evaluation Worksheet
Complete the following worksheet by inserting the appropriate values to evaluate the contract and answer the related questions. Note: To clarify possible sources of confusion and simplify your calculations:

Assume that all bonuses are earned in each of the years for which they are available and are paid at the end of the corresponding year(s), unless specifically stated differently. Their value should be based on the salary in effect at the time the bonuses were earned.

The endorsement proceeds are paid in accordance with the terms of the deal.

Remember that the timing of a cash flow affects the interest rate that is used to discount the cash flow. For example, annual interest rates should be used to discount annual cash flows, and monthly interest rates are used to discount monthly cash flows. Therefore, it may be necessary to compute the appropriate interest rate that should be used in a discounting calculation.

Round all dollar amounts to the nearest whole dollar and carry out all interest rate factors to four decimal places.

When entering intermediate values as answer choices, be sure to round them to the nearest dollar, however when using those same values to calculate another answer, do not round.

1. Given your worksheet calculations, which of the following statements is accurate? Is Noah’s estimate of the value of Flynn’s contract accurate on either a nominal or discounted basis? Check all that apply.

-Noah’s estimate of the nominal value of Flynn’s contract is correct.

-Noah’s estimate of the value of Flynn’s contract is incorrect on a nominal basis, and the error is \$52,513.

It is appropriate and necessary to discount the performance bonus using the bank account’s effective annual interest rate because of differences in the timing of the compounding of the bank account and that of the payments for the performance bonus.

Related Question: The local car dealer creating Flynn's endorsement opportunity can earn 6% (compounded quarterly) on his deposited funds. She would have to deposit \$————– each quarter, starting exactly two years before the day Flynn signs his contract, to fund her endorsement contract. [Note: The future value interest factor of 6% compounded quarterly for eight quarterly periods is 8.4328.]

Are you overwhelmed by your class schedule and need help completing this assignment? You deserve the best professional and plagiarism-free writing services. Allow us to take the weight off your shoulders by clicking this button.

Who Will Write your Paper

Tutor_Charles

Rating: 4.9/5    Reviews 377

Success rate 98%

Completed projects: 545

I am an experienced writer offering professional services across diverse fields. I provide quality work with strict adherence to the deadline.

Tutor_Dr. Edith

Rating: 4.8/5    Reviews 381

Success rate 96%

Completed projects: 490

I am an experienced writer with great research and analytical skills. Original quality paper and on-time delivery are guaranteed. Let's do this!

Tutor_Dr.Judy

Rating: 4.7/5    Reviews 316

Success rate 96%

Completed projects: 398

I am a professional writer with more than 8 years of experience. My mission is to provide you with high-quality paper in a timely fashion.

Tutor_Ian

Rating: 4.8/5    Reviews 371

Success rate 97%

Completed projects: 432

Hi, I deliver quality papers on time following all the instructions provided. Client's satisfaction is my priority. Welcome for plagiarism-free papers.

Tutor_Prof. Allan

Rating: 4.8/5    Reviews 400

Success rate 99%

Completed projects: 487

With over half a decade of academic experience, I'm committed both to efficiency and punctuality. If it's quality you're looking for, then I'm here to provide!

Tutor_Prof. Gabie

Rating: 4.9/5    Reviews 447

Success rate 98%

Completed projects: 546

A quality-driven, skilled writer with over 5 years of experience in various disciplines. I deliver plagiarism-free papers and content of impeccable quality, always original and always before the deadline!

Tutor_Sarah

Rating: 4.9/5    Reviews 427

Success rate 97%

Completed projects: 567

I have been a full-time freelance researcher and writer for a period of over 6 years. I have successfully completed over 1000 projects and assignments. I have had a good professional relationship with my clients. Try me today!

Tutor_Stella

Rating: 4.9/5    Reviews 305

Success rate 97%

Completed projects: 404

I am a proficient writer with knowledge across a wide range of academic disciplines. I guarantee quality, timely and original content.

Tutor_SylviaYoung

Rating: /5    Reviews 419

Success rate 98%

Completed projects: 506

Hi, count on me to deliver quality and exemplary papers. I will pay attention to all your instructions, and meet all your expectations.