1. Assume the Cardinals are considering two contract options for extending the contract of pitcher Jordan Hicks, the first one is a traditional back-loaded contract over an eight year period, and the second is a constant value contract over an 8 year period. In both scenarios, the team becomes indifferent to his performance at year 5 of the contract, Hicks provides a maximum marginal benefit of $20 million, (you can assume this occurs at the vertical intercept of the MB function) and by the final year of his contract he provides zero benefit. Assume both contracts are for a total of $80. Under the constant value contract the cost to the team will be $10 per year. Under the traditional contract the cost to the team will be $3 million in year one (zero if no contract…years 0). Each subsequent year the cost rises by $2 million (so $5 million in year 2, $7 in year 3 and so on until year 8, remember the total cost will be $80 million).  
   1. Graphically show each possibility clearly identifying the areas of the contract that are efficient and inefficient (I would use different colors to ID them) to the team, include all endpoint values on your graph. You may assume linear functions.

2. Calculate the total net benefit of each contract type and decided what contact type the team should offer.