Question
You have recently started a new career in sports career management. One of your new clients, Stephen Curry is asking you to help him figure
You have recently started a new career in sports career management. One of your new clients, Stephen Curry is asking you to help him figure out whether he should accept an offer from the LA Clippers. The terms of the contract are detailed below. At the time of the signature Stephen Curry would receive an immediate cash payment of $[2+3] million. In the following 5-year contract he would get a total $[9+1+6+60] million salary. Below are the main details of the way the salary would be paid, should he accept the contract. The annual salary schedule proposed by the Clippers is as follows: $[9]M in 2021, $[1]M in 2022, $[6]M in 2023, $30M in 2024 and $30M in 2025. Stephen Curry currently has the following salary payments promised by the Golden State Warriors: $[1]M in 2021, $[6]M in 2022, $[2+9+1]M in 2023, $40M in 2024 and $60M in 2025. In addition to these payments, Stephen Curry currently has marketing deals with three companies totaling $[2+9+1+6]M in annual revenues for the next 5 years. These would not be lost if he moves to the Clippers team. If he joins the Clippers, you are certain that he could land a new marketing deal with local firms adding $8M in annual revenues for the next 5 years. Assume that all the payments are made on December 31 of the year in which they are due, that there is no uncertainty about future payments, no differences in tax payment between Clippers and Golden State, and that the decision criteria is purely financial. The interest rate is [4+2]% a) What is the NPV for Moving. b) What is the NPV for Staying. c) Should he switch teams? Yes, No.
NOTE: Provide your answers in Millions. E.G. for 100M you must enter 100.0000, for 20M you must enter 20.0000, etc. NOTE: For Part C, answer Yes or No.
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