Inflationary Income

The Friday File: The Washington Nationals recently signed hurler Max Sherzer to a mind-blowing seven-year $210 million contract, payable over 14 years. Sherzer will receive $15 million/year. Beyond Sherzer’s performance, this is a bet on expected long-term inflation. If inflation averages 2% over the life of the contract, it’s worth $196.6 million. At 4% it’s $173.4 million. A fortune either way but a staggering difference of $23.2 million!

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