don't put me on your team, but I do want that money.
Except, I'm okay about not receiving the money today.
I would like to receive the money in the future and so,
they made an agreement that starting in 2011, it's July 1st as a matter of fact.
And ending on July 1st of 2035,
Bobby Bonilla would collect an annual paycheck of $1,193,248.
So Bobby Bonilla put off $5.9
million in the year 2000.
And he agreed to collect 25 annual
payments of $1,193,248.
What is the mathematics of this?
Let me show you, of course, this is a future value, present value calculation.
And it must be that the future value of $1 million payouts has got to be,
either exactly equal to $5.9 million, or
from Bobby Bonilla's standpoint, has to be worth more,
because he certainly, wouldn't accept less.
How do we know what it exactly worth?
Of course, we've done the calculations and
we know that we have to find the interest rate such that
the sum of all of the payouts of $1,193,248.
Starting 11 years from when he agreed,
all the way through the year 2035 must be equal to his $5.9 million.
So if he puts it into an interest bearing account.
Like If he had taken his $5.9 million and put it into an interest bearing account,
it would be worth something 35 years from now.
So we had to ask essentially what is the interest that he would be
giving up in order to accumulate this?
And so, at an interest of 8%, Bobby Bonilla’s
present value of equal payments of 1,193,248,
starting in the years 2011 and
going all the way through 2035,
would exactly be equal to $5.9 million if
he had received it in the year 2000.
So from here, we can identify that Bobby Bonilla's discount rate is 8%.
Well then, why would the Mets be willing to pay this?