1. You are the owner of a sports team and have just signed a major player to a $15,000,000 5 year deal. The deal calls for an annual salary of $200,000 per year with the lump sum being paid at the end of year 15.
2. How much money should you invest today at an assumed rate of 6% to ensure you have the money to pay the lump sum?
3. Arbitrage is limited because the wealth of arbitrageurs is limited. Discuss this statement in the context of those who are managing their own money and those who are managing other people’s money.