^{Matt, a Star Basketball player, is looking to join a}

question 216

Multiple Choice

^{Matt, a star basketball player, is looking to join a new NBA team. The Bulls are offering him $24 million for one year. The Heat is offering him $10 million this year and $7.0 million in each of the next two years. The market interest rate is 5 percent.What is the present value of the offer from The Heat} in millions (rounded to the nearest one hundred thousand dollars) ?

• A)$22.5 million
• B)$23.0 million
• C)$24.0 million
• D)$25.2 million

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Definitions:

Annual Benefits

Benefits or returns that are received on a yearly basis from investments, insurance policies, or employee benefit programs.

Compounded Monthly

Refers to the process of applying interest to an initial amount and any accumulated interest on a monthly basis.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Trust Fund

A fund comprised of a variety of assets intended to provide benefits to an individual or organization.