III tIe preseII to see IIUw Inucil eacil contract is worth, apples to apples. You should discount future cash at a $10$ percent interest rate.

Steve

Let's work through the first contract together. How much is the signing bonus worth today?

Materials on the right have been updated $$

$$772,650$

$$924,615$

$$916,410$

$$908,205$

Offer $1$

$$916,410$ immediate signing bonus

$$850,000$ at the end of each year for the next $5$ years

Offer $2$

$$208,205$ 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 $40$

Offer $3$

$$1,003,282$ 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 $4$

$$166,410$ bonus for any year Luke is selected to play in the Pro Bowl All Star game $125\%$ probability in each year$)$