You are advising a young sportsperson about a contract offer. Your client, only 15 years old, wants to remain an amateur for three more years and then become a professional. One of the best teams in the world in your client’s sport has offered a contract with interesting terms. There would be no payments for three years, thus allowing continued status as an amateur. Beginning at the end of the fourth year, your client will receive $1 million a year for four years.
What is the current value of the contract offer if the discount rate is 8%?
