LeBron James was a high school sensation who considered turning pro after his junior year in high school. When he finished high school, James was drafted number one by the Cleveland Cavaliers in the 2003 NBA draft.

He signed a four-year rookie contract with the following salary schedule:

Season Salary 2003–2004 $4.02 million 2004–2005 $4.32 million 2005–2006 $4.62 million 2006–2007 $5.80 million (check option)

a. What do you have to know to value this contract on signing day?

b. From a purely financial perspective, did James make the right ex ante choice by going straight from high school to the NBA?

c. Have things worked out for James?