Recently, an NFL quarterback agreed to an eight-year, $50 million contract that at the time made him one of the highest-paid players in professional football history. The contract included a signing bonus of $11 million. The agreement called for annual salaries of $2.5 million in 2005, $1.75 million in 2006, $4.15 million in 2007, $4.90 million in 2008, $5.25 million in 2009, $6.2 million in 2010, $6.75 million in 2011. and $7.5 million in 2012. The $11 million signing bonus was pro-rated over the course of the contract, so that an additional $1,375 million was paid each year over the eight-year contract period.
(a) How much was the quarterback's contract actually worth at the time of signing?
(b) For the signing bonus portion, suppose that the quarterback was allowed to take either the prorated payment option as just described, or a lump-sum payment option in the amount of $8 million at the time he signed the contract. Should he have taken the lump-sum option in-stead of the pro-rated one? Assume that his interest rate is 6%.