. What is your advice?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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You have been hired as a financial advisor to Michael Jordan. He has received two offers for
playing professional basketball and wants to select the best offer, based on considerations of
money only. Offer A is a $10m offer for $2m a year for 5 years. Offer B is a $11m offer of $1m
a year for four years and $7m in year 5. What is your advice? (Hint: compare the present value of
each contract by assuming a range of interest rate, say 8% - 14%)

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