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A professional sports contract offers $130,000 paid now, $210,000 paid at the end of each of the second and third years, and $700,000 paid at
A professional sports contract offers
$130,000
paid now,
$210,000
paid at the end of each of the
second
and
third
years, and
$700,000
paid at the end of the
fourth,
fifth,
and
sixth
years (Alternative 1). Alternatively, the contract could offer
$410,000
per year paid at the end of each of the six years (Alternative 2). If money is worth
8.5%,
which offer is preferable for the athlete?
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