A Star Basketball Player Signs a Contract That Newspaper Reports

Multiple Choice

A star basketball player signs a contract that newspaper reports say is worth $10 million. The player receives $5 million on signing, and $5 million a year for three years. The contract is worth

A) $10 million as reported in the papers.
B) less than $10 million since the present value of $5 million received one or more years from now is less than $5 million.
C) more than $10 million because the present value of $5 million received one or more years from now is more than $5 million.
D) either more or less than $10 million, depending on the value of the discount rate.