You are the owner of a basketball team. You will hire free agents but you don't know which is the best. You and your team have narrowed your strategies down to two scenarios:
1. You will sign only one player, for 86$ million over 8 years. He would earn 16$ million for each of the first two years, then 9 million for remaining 6 years.
2. You sign three players A, B, C. A will get 8 year contract worth 5.5$ million and signing bonus today of 1.5$ million. B Would get a three year deal worth 8 million the first year and 10 million second year and 12 milllion third year. C would get 5 year deal worth 2 million per year with 500,000$ bonus at the end of the contract.
Which scenario is cheapest in today's dollar if the interest rate is 7.5% compounded annually? By how much? Show your work.