In early 2010, newspapers reported that NBA superstar Kobe Bryant had signed an extension to his existing contract. His salaries in future years under the contract extension would be as follows:
For the season ending in 2012: $25,244,000 For the season ending in 2013: $27,849,000 For the season ending in 2014: $30,453,000
For simplicity, assume that the salary for the season ending in 2012 would be received in a lump sum two years from when Kobe Bryant signed the contract, the salary for the season ending in 2013 would be received in three years, and the salary for the season ending in 2014 would be received in four years.
Newspapers reported that the contract extension had a value of $85 million. Were they correct? Briefly explain.