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A creative general manager has offered two different contracts to a vain quarterback. The contracts are shown below: CONTACT A CONTRACT B YEAR SALARY YEAR
A creative general manager has offered two different contracts to a vain quarterback. The contracts are shown below:
CONTACT A | CONTRACT B | ||
---|---|---|---|
YEAR | SALARY | YEAR | SALARY |
0 | $506,500.00 | 0 | $306,475.00 |
1 | $506,500.00 | 1 | $306,475.00 |
2 | $506,500.00 | 2 | $809,550.00 |
3 | $506,500.00 | 3 | $809,550.00 |
4 | $506,500.00 | 4 | $809,550.00 |
The newspapers report the total dollars of the contract, so contract A will pay a total of $2,532,500.00, while contract B will pay $3,041,600.00. The player will select contract B as it has more publicity. The team can earn 8.00% on their investments, so let's determine the value of each contract.
What is the present value of contract B?
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