A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 8%. 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: 3 Contract 1 $3,500,000 $3,500,000 $3,500,000 $3,500,000 Contract 2 $2,000,000 $3,000,000 $4,500,000 $5,000,000 Contract 3 $6,000,000 $1,500,000 $1,500,000 $1,500,000 As his adviser, which contract would you recommend that he accept? Select the correct answer. a. Contract 1 gives the quarterback the highest future value; therefore, he should accept Contract 1. b. Contract 2 gives the quarterback the highest present value; therefore, he should accept Contract 2. c. Contract 3 gives the quarterback the highest present value; therefore, he should accept Contract 3. d. Contract 3 gives the quarterback the highest future value; therefore, he should accept Contract 3. e. Contract 1 gives the quarterback the highest present value; therefore, he should accept Contract 1. What is the present value of a $100 perpetuity if the interest rate is 3%? If interest rates doubled to 6%, what would its present value be? Round your answers to the nearest cent. Present value at 3%: $ Present value at 6%: $ a. Find the present values of the following cash flow streams at a 7% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent. 0 1 2 5 4 + 3 + Stream A $0 $150 $400 $400 $400 $250 Stream B $0 $250 $400 $400 $150 $400 Stream A: $ Stream B: $ b. What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar. Stream A: $ Stream B: $