Suppose the star pitcher on a university's baseball team, who is now a sophomore, decides to finish college instead of joining a major league team.In doing this, he is giving up a $40, 000 salary for each of the next two years.At an interest rate of 10 percent, the total value of this sacrifice is approximately

Question

Quizplus · Accepted Answer

To find the present value of the player's sacrifice, we need to use the formula for present value of an annuity:

PV = A * [(1 - (1+r)^-n) / r]

Where:
PV = present value
A = annual payment (salary)
r = interest rate
n = number of years

Using this formula with the given values, we get:

PV = $40,000 * [(1 - (1+0.1)^-2) / 0.1] ≈ $69,420

Therefore, the total value of the player's sacrifice is approximately $69,420. The closest answer choice to this amount is C, $69,420.

Suppose the Star Pitcher on a University's Baseball Team, Who