Value of Money Close Return to Activity Score Contract Offers PV PV Anty Ofter 1 $900,000 immediate signing bonus $850,000 at the end of each year for the next 5 years Luke then remembers that Steve said that there is a 25% percent probability of him playing in the Pro Bowl each year, Materials Offer 2 $200,000 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 What is the present value of the Pro Bowl clause adjusted for its probability? (Hint: multiply each annual payment by the probability Offer 3 $1,000,000 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 $200,000 bonus for any year Luke is selected to play in the Pro Bowl All Star game (253 probability in each year) $158,500 $136,600 $34,150 Canadian Football League $1,100,000 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) $124,350 Value of Money Close Return to Activity Score Contract Offers PV PV Anty Ofter 1 $900,000 immediate signing bonus $850,000 at the end of each year for the next 5 years Luke then remembers that Steve said that there is a 25% percent probability of him playing in the Pro Bowl each year, Materials Offer 2 $200,000 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 What is the present value of the Pro Bowl clause adjusted for its probability? (Hint: multiply each annual payment by the probability Offer 3 $1,000,000 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 $200,000 bonus for any year Luke is selected to play in the Pro Bowl All Star game (253 probability in each year) $158,500 $136,600 $34,150 Canadian Football League $1,100,000 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) $124,350