Suppose that Stephen Curry, a basketball player for the Golden State Warriors, will become a free agent at the end of this NBA season. Suppose that Curry is considering two possible contracts from different teams. Note that the salaries are paid at the end of EACH year.?Contract #1 (Boston)Contract #2 (Portland)Signing bonus (paid today)$1 million$1 millionFirst-year salary$2 million$4 millionSecond-year salary$4 million$4 millionThird-year salary$5 million$3 millionThe interest rate is 10%. Based on this information, which of the following is true?
A. Curry is indifferent between the two contracts because they are both worth $12 million.
B. Curry is indifferent between the two contracts because they are both worth $10.9 million.
C. Curry should take the Boston contract because it has a higher present value.
D. Curry should take the Portland contract because it has a higher present value.
Answer: D
You might also like to view...
The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon and Dana is allowed to buy only 8 gallons of ice cream, then her consumer surplus on the 8th gallon is
A) $1. B) $2. C) $3. D) $8.
Based on this graph for the welfare effects of a subsidy, when does the deadweight loss start?
a. when the demand rises above the quantity at E1
b. when the supply rises above the quantity at E1
c. when the supply rises above the quantity at E2
d. when the demand drops below the quantity at E2
When combined, in present value terms, the underfunded nature of Social Security, Medicare, and State and local pensions adds to
A. $17 trillion. B. $170 trillion. C. $17 million D. $17 billion.
When comparing the severity of recessions since World War II, economists focus on the ones in
A. 2001 and 2007-2009. B. 1968 and 1974. C. 1990 and 2001. D. 1982 and 2007-2009.