Trevor Story is a shortstop and second baseman for the Boston Red Sox. He was signed by the team in Boston for the $2022$ season. He previously played shortstop for the Colorado Rockies for $6$ seasons, where he earned $2$ Silver Slugger awards. The details of his contract can be found at:

Imagine that you are Trevor Story, and are considering this contract in April $2022.$ Obviously it gets paid out over several years. However, you know that a dollar today is worth more than a dollar tomorrow, and so you want to figure out what the contract is worth today.

This is a present value problem, but unlike a book problem, you don't have all the variables supplied for you. This is a real$-$life application of your TVM skills! Draw a timeline to keep the information straight $-$ it really helps!

A few considerations $-$ Assume that it is April $1,2022,$ and that payments are made at the end of each year. Payments begin in $2022.$ Note: At the end of $2025,$ Story has the choice to opt out of his contract and receive a final payment from the Red Sox of $$5$ million. The Red Sox then have an option of keeping him anyway in exchange for adding the $2028$ year at a salary of $$25$ million.

What interest rate should you use? This will depend partially on the certainty of receiving the payments. Guaranteed payments should carry a lower interest rate than any payments that are not certain and therefore have a greater associated risk. So$,$ you may use different rates for different years. You may consider what rate you might earn on the funds if you were able to invest them, and use that as a starting point. There is no wrong answer here $-$ you all may look at the problem differently $-$ but try to use the correct TVM procedure to arrive at your answer.