A famous quarterback just signed a $12.8 million contract providing $3.2 million a year for 4 years. A less famous receiver signed a $8.6 million 4-year contract providing $3 million now and $2.5 million a year for 4 years. The interest rate is 9%.

a. What is the PV of the quarterback's contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Present Value: _________ million

b. What is the PV of the receiver's contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Present Value: _________ million

c. Who is better paid?

• Quarterback

• Receiver

Calculate the present value of the following:

a-1. Annual payment of $1,075 for 10 years at 5% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present Value: _______

a-2. Annual payment of $875 for 15 years at 5% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present Value: ________

a-3. Which option would you prefer?

b-1. Annual payment of $1,075 for 10 years at 20% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present Value: ________

b-2. Annual payment of $875 for 15 years at 20% interest. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present Value: _________

b-3. Which option would you prefer?