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Which payout should he take

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Question - A Villanova basketball player just got an offer to join the Milwaukee Bucks. The Bucks are offering him a $10,000,000 contract to play for five years, which can be paid in one of two ways:

Payout 1: $2,000,000 per year for five years paid at the end of each year.

Payout 2: $2,000,000 signing bonus (i.e., at the beginning of year 1) and $1,600,000 per year for each of the five years paid at the end of each year.

Assuming the basketball player can earn 10% on his money, which payout should he take?

Reference no: EM133109138

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