Xavier is a baseball player negotiating a contract to play for a team for one year.He is usually paid $10 million a year for playing, but the salary cap for his team means that he will have to be paid $5 million this year and the remainder next year.If the interest rate is 8 percent, how much should that remaining amount be next year?

Question

Quizplus · Accepted Answer

The remaining amount should be $5 million compounded at 8% interest for one year, which is $5 million * 1.08 = $5.4 million.

Xavier Is a Baseball Player Negotiating a Contract to Play