The IPL just signed Sachin to a contract consisting of eight, end‐of‐year payments worth $9 million

each,

with the first payment precisely one year from today. On the other hand, Dhoni recent deal calls for six

annual payments of $7 million, starting one year from now and ending six years from now, along with payments of

$14 million in 7 years and $17 million in 8 years. Sachin interviewed on a TV, complaining that his contract “is worth a

million less than Dhoni”. If you perform any time‐value analysis, use a discount rate of 5% per year. (1) First, how did

Sachin get his number of “a million”? (2) Using Time value money explain whether Sachin is wrong or right and briefly explain so he can understand.

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