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A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 10%. He has been offered three possible 4-year contracts. Payments are guaranteed,
A rookie quarterback is negotiating his first NFL 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, 500,000 $3, 500,000 $3, 500,000 $3, 500,000 Contract 2 $2, 500,000 $3, 500,000 $4, 500,000 $5, 500,000 Contract 3 $6,000,000 $1,000,000 $1,000,000 $1,000,000 As his adviser, which contract would you recommend that he accept? Select the correct answer. Contract 3 gives the quarterback the highest future value therefore, he should accept Contract 3. Contract 1 gives the quarterback the highest present value, therefore, he should accept contract 1. Contract 3 gives the quarterback the highest present values therefore, he should accept contact 3. Contract 1 gives the quarterback the highest future value; therefore, he should accept Contract 1. Contract 2 gives the quarterback the highest present value; therefore, he should accept Contract 2
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