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Jaylen Brown, a forward for the Boston Celtics, has been offered a seven - year, $ 7 5 0 million contract, where he will be
Jaylen Brown, a forward for the Boston Celtics, has been offered a sevenyear, $ million contract, where he will be paid $ million a year for the next three years, and $ million a year for the following four years. The appropriate discount rate is
a What is the present value of this contract?
b He is weighing an alternative offer from the Los Angeles Lakers, where he will be paid $ million a year for the next seven years and an additional $ million at the end of the seventh year. What is the present value of this contract?
c What would the payment at the end of the seventh year need to be for Jaylen Brown to be indifferent between the two offers?
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