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Present value of a contract. A basketball player has just signed a $30 million contract to play for three years. They will receive $5 million
Present value of a contract. A basketball player has just signed a $30 million contract to play for three years. They will receive $5 million as an immediate cash bonus, $5 million at the end of the first year, $8 million at the end of the second year, and the remaining $12 million at the end of the contract. Assuming a discount rate of 10 percent, what is the value of the package?
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