Question

A famous quarterback just signed a $10.4 million contract providing $2.6 million a year for 4 years. a less famous receiver signed a $13.0 million 4-year contract providing $3 million now and $2.5 million a year for 4 years. the interest rate is 8%.

Answer 1

The question relates to comparing the value of two sports contracts using the time value of money concept. An 8% interest rate is used to calculate the present value of the payments. The calculation is a high school-level mathematics or business problem.

Step-by-step explanation:

The question involves comparing two football players' contracts through calculations that involve understanding and applying the concept of the time value of money, which is a financial principle typically covered in high school mathematics or business courses. The interest rate mentioned is essential for determining the present value or future value of the contracts. We are given that a quarterback signed a contract for $10.4 million, with $2.6 million paid each year over four years, and a receiver signed for $13.0 million, with $3 million paid now and $2.5 million each year for four years.

The time value of money is used to calculate the present value of these payments considering the 8% interest rate. This involves discounting future payments back to their present value to compare the true worth of both contracts accurately.

I will not be including an explanation of slope (b = 1.99) and the lack of correlation between datasets (point 23) since they do not directly relate to the question about contract values and interest rates, but could be part of a broader discussion on the economics of sports endorsements.