Value of Pro Athlete Contract. Sports News has been highlighting a rookie quarterback signing his first contract.
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Value of Pro Athlete Contract. Sports News has been highlighting a rookie quarterback signing his first contract. The General Manager offered a choice of four-year contracts. One choice is a payment of $1.5 million at the end for each year over the four-year contract. Suppose you are a financial analyst asked to value the contract at a discount rate of 12%. You quickly calculate NPV and report the contract is worth approximately _____. (Hint: the payment at time zero is not a cash outflow or a sunk cost; it is a cash inflow)
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