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# A baseball team consists of 2 stars 13 starters and 10 substitutes For tax purposes, the team owner must value the players The value of each player is defined to be the total value of the salary

A baseball team consists of 2 stars, 13 starters, and 10 substitutes. For tax purposes, the team owner must value the players. The value of each player is defined to be the total value of the salary he will earn until retirement. At the beginning of each season, the players are classified into one of four categories:

Category 1 Star (earns \$1 million per year)

Category 2 Starter (earns \$400,000 per year)

Category 3 Substitute (earns \$100,000 per year)

Category 4 Retired (earns no more salary)

Given that a player is a star, starter, or substitute at the beginning of the current season, the probabilities that he will be a star, starter, substitute, or retired at the beginning of the next season are as follows:

Suppose that in evaluating a player’s value, the owner must discount future salaries. Assume that \$1 paid out in salary during the next season is equivalent to 90¢ paid out during the current season. Can you still determine the value of the team’s players?

Aug 05 2020 View more View Less