PV

Luke

$$138,379$

Correct! The solution is to treat it like a $4$ year annuity and discount the total by the probability that Luke will play.

$$174,600**3\mathrm{.}170**0\mathrm{.}25$

$=$$$138,371$

What is the total value of Contract offer #$3?$

Enter a response then click Submit below

$$0$

Offer $1$

$$924,600$ immediate signing bonus

$$850,000$ at the end of each year for the next $5$ years

Offer $2$

$$212,300$ 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 $40$

Offer $3$

$$1,004,920$ immediate signing bonus

$$500,000$ at the end of Year $1$