A Ghanaian football player, Kofi Yeboah has recently been approached by 5 top football clubs from Europe offering to sign him on. All five clubs are offering enticing packages to this youngster who excelled in a just ended tournament. A summary of the clubs and their offers are shown below: a) A.C. Milan based in Italy offers to pay €200,000 every year over the contract period b) Chelsea F.C. based in England proposes a total package of €1,050,000 at the end of the contract period c) F.C. Barcelona based in Spain is offering €195,000 every year but payable at the start of each year. d) SC Bastia based in France is also offering a total package of €897,000. Although this is the total contract value over the 5-year period, the club manager however, added that if the player signs for SC Bastia, the whole amount will be paid to him immediately. e) FC Augsburg based in Germany proposes an annual payment of €35,000. The club adds that the player will be entitled to this package even after the contract period up to a time the player will be tired of receiving the payments. The contract duration for all five clubs is 5years and may be renewed afterwards. Analyst expect that interest rate will be relatively stable and will average at 7% per annum throughout the contract period. Other political, economic and environmental risk factors are assumed to be relative stable across the European region. Required: You have just been appointed as a financial consulted by the management team of this player. As part of your first meeting with the management team, you are to present a report explaining the financial implications of the various offers and advise them which club the player should sign for based on financial grounds. Include all necessary calculation as part of your report.
A Ghanaian football player, Kofi Yeboah has recently been approached by 5 top football clubs from Europe offering to sign him on. All five clubs are offering enticing packages to this youngster who excelled in a just ended tournament. A summary of the clubs and their offers are shown below: a) A.C. Milan based in Italy offers to pay €200,000 every year over the contract period b) Chelsea F.C. based in England proposes a total package of €1,050,000 at the end of the contract period c) F.C. Barcelona based in Spain is offering €195,000 every year but payable at the start of each year. d) SC Bastia based in France is also offering a total package of €897,000. Although this is the total contract value over the 5-year period, the club manager however, added that if the player signs for SC Bastia, the whole amount will be paid to him immediately. e) FC Augsburg based in Germany proposes an annual payment of €35,000. The club adds that the player will be entitled to this package even after the contract period up to a time the player will be tired of receiving the payments. The contract duration for all five clubs is 5years and may be renewed afterwards. Analyst expect that interest rate will be relatively stable and will average at 7% per annum throughout the contract period. Other political, economic and environmental risk factors are assumed to be relative stable across the European region. Required: You have just been appointed as a financial consulted by the management team of this player. As part of your first meeting with the management team, you are to present a report explaining the financial implications of the various offers and advise them which club the player should sign for based on financial grounds. Include all necessary calculation as part of your report.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
100%
A Ghanaian football player, Kofi Yeboah has recently been approached by 5 top football clubs from Europe offering to sign him on. All five clubs are offering enticing packages to this youngster who excelled in a just ended tournament. A summary of the clubs and their offers are shown below:
a) A.C. Milan based in Italy offers to pay €200,000 every year over the contract period
b) Chelsea F.C. based in England proposes a total package of €1,050,000 at the end of the contract period
c) F.C. Barcelona based in Spain is offering €195,000 every year but payable at the start of each year.
d) SC Bastia based in France is also offering a total package of €897,000. Although this is the total contract value over the 5-year period, the club manager however, added that if the player signs for SC Bastia, the whole amount will be paid to him immediately.
e) FC Augsburg based in Germany proposes an annual payment of €35,000. The club adds that the player will be entitled to this package even after the contract period up to a time the player will be tired of receiving the payments.
The contract duration for all five clubs is 5years and may be renewed afterwards. Analyst expect that interest rate will be relatively stable and will average at 7% per annum throughout the contract period. Other political, economic and environmental risk factors are assumed to be relative stable across the European region.
Required:
You have just been appointed as a financial consulted by the management team of this player. As part of your first meeting with the management team, you are to present a report explaining the financial implications of the various offers and advise them which club the player should sign for based on financial grounds. Include all necessary calculation as part of your report.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 7 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education