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4) A rookie basketball player is negotiating his first contract. His opportunity cost is 10%. He has been offered three possible 4-year contracts. Payments are
4) A rookie basketball player is negotiating his first contract. His opportunity cost is 10%. He has been offered three possible 4-year contracts. Payments are guaranteed, and they would be made at the end of each year. Terms of each contract are as follows: Contract 1: $3,000,000 $2,000,000 $7,000,000 $3,000,000 II. Contract 2: $3,000,000 $1,000,000 $5,000,000 $6,000,000 Contract 3: 3,000,000 $3,000,000 $5,000,000 $3,000,000 III. Which contract is best and why? 5) Find the amount to which $500 will grow under each of these conditions: IV. 12% compounded annually for 5 years V. 11.5% compounded quarterly for 5 years VI. 11.% compounded monthly for 5 years 10.5% compounded daily for 5 years VII
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