Offer 1 - \$907,255 immediate signing bonus Luke Steve Basically, the goal is to convert future dollars into how much they are worth in the present to see how much each 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? - $850,000 at the end of each year for the next 5 years Offer 2 - \$203,628 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 - \$1,001,451 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 - $157,255 bonus for any year Luke is selected to play in the Pro Bowl All Star game (25\% probability in each year) Canadian Football League - \$1,107,255 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)