Problem

Calculating Present Values. 2007 was also a good year to be an NFL quarterback. Tony Romo...

Calculating Present Values. 2007 was also a good year to be an NFL quarterback. Tony Romo of the Dallas Cowboys signed a contract reportedly worth $67.5 million. The contract called for $16 million immediately, $6.5 million in 2008, $7 million in 2009, $8.5 million in 2010, $9 million in 2011 and 2012, and $11.5 million in 2013. If the appropriate interest rate is 11 percent, what is the present value of the deal? Assume all payments other than the first $16 million are paid at the end of the year.

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