The New York Yankees signed pitcher Masahiro Tanaka to a seven-year contract. Because Mr Tanaka was undercontract in Japan with the Golden Eagles, the Yankees paid them $20,000,000 to release him. Mr Tanaka's contractcalls for payments of $22,000,000 per year for six years and $23,000,000 in year seven.Assuming an 8 percent discount rate and that Mr Tanaka's salary is paid annually, starting 12 months after the fee paidthe Golden Eagles, the present value of the Yankees' commitment, including the fee paid to the Golden Eagles, on thesigning day of the contract is $. (Round your answer to two decimal places.)

Present value of annuityPV = A * where ,PV = Present value of annuityA = Periodic paymentsr =…

Answered: The New York Yankees signed pitcher…

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

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