Question
Contract Offers PV PV Annuity Offer 1 Offer 2 $938,840 immediate signing bonus $850,000 at the end of each year for the next 5
Contract Offers PV PV Annuity Offer 1 Offer 2 $938,840 immediate signing bonus $850,000 at the end of each year for the next 5 years Offer 3 $219,420 immediate signing bonus $100,000 at the end of Years 1 through 4 $150,000 at the end of Years 5 through 10 $1,000,000 and the end of Years 11 through 40 $1,007,768 immediate signing bonus $500,000 at the end of Year 1 $1,000,000 at the end of Year 2 $1,500,000 at the end of Year 3 $2,500,000 at the end of Year 4 $188,840 bonus for any year Luke is selected to play in the Pro Bowl All Star game (25% probability in each year) Canadian Football League $1,138,840 immediate signing bonus $2,000,000 at the end of Years 1 through 3 Only signing bonus is guaranteed (80% probability of being on team each year) Materials What is the total value of Contract offer #3?
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