Question 1090113
i used excel to get the present value and the future value of all cash flows.


that worksheet is shown below:


<img src = "http://theo.x10hosting.com/2017/081201.jpg" alt="$$$" </>


sum(cf) is the sum of all cash flows without any discounting applied to them.
the total is 50 million as it should be.


sum(pv) is the sum of all cash flows discounted at 6% to the beginning of the season in 2003.


sum(fv) is the sum of all cash flows discounted at 6% to the beginning of the season in 2010.

the formula for finding the present value of all cash flows is:


present value of cash flow in year x is equal to the cash flow in year x divided by 1.06 raised to the power of (x minus 2003)


future value of cash flow in year x is equal to the cash flow in year x multiplied by 1.06 raise to the power of (2010 minus x)


the present value of a cash flow in 2003 is that cash flow because it is divided by 1.06 raised to the power of (2003 - 2003) which means it is divided by 1.06 raised to the power of 0 and anything raised to the power of 0 is equal to 1.


the future value of a cash flow in 2010 is that cash flow because it is multiplied by 1.06 raised to the power of (2010 - 1020) which means it is multiplied by 1.06 raised to the power of 0 and anything raised to the power of 0 is equal to 1.


what he received in annual salary and bonuses is equivalent to being given 39.5 million up front.


if he takes that money and invests it at 6% per year, it's worth 59.l5 million at the beginning of the season in 2010.


this assumes, of course, that he hasn't spent any of in the mean time, which is probably not the case since he needs at least some of that money to live on during the 8 years.