Berry Hart had been nominated as the second runner up for the Heisman Trophy in his senior year at a major Midwestern university. Only outstanding athletes get the trophy and it is presented annually by the New York Athletic Club. Hart has had impressive achievements throughout his involvement in college football. Hart had run for over 1,550 yards, scored 19 touchdowns, caught 44 passes coming out of the backfield and his time in running the 40-yard dash, which professional scouts consider to be extremely important, was 4.58 seconds. He was also voted second team All American by the Associated Press and was a first team All American in the Coaches Poll selections. Hart is inspired to become a professional football player after college and has received a few proposals for his services. In the first round of the National Football League, he had been drafted as the five players out of thousands of college football players that were eligible for that year. Not only that he is well sought after in the United States, but he was also scouted by a team of the Canadian Football League. The Canadian team had also contacted Hart to put its offer on the table. The West Coast NFL team offered the following four proposals. The team's general manager,who was in charge of contract negotiations, said his team would stand behind any of the four offers and it was up to Berry Hart to choose which he preferred:

Contract offer 1:

• $800,000 immediate signing bonus
• $800,000 at the end of each year for the next five years

Contract offer 2:

• $300,000 immediate signing bonus
• $100,500 at the end of each year for the next five years
• $170,000 a year at the end of years 6 through 10
• $1,500,000 a year at the end of years 11 through year 40

Contract offer 3:

• $1,100,000 immediate signing bonus
• $550,000 at the end of year 1
• $1,000,000 at the end of year 2
• $1,600,000 at the end of year 3
• $2,500,000 at the end of year 4
• $2,000,000 at the end of year 5

Contract offer 4:

• $1,100,000 immediate signing bonus
• $2,000,000 at the beginning of each year for the next four years.

While the National Football League (NFL) team that had drafted Berry Hart in the first round had exclusive rights over other U.S. teams in signing him during the current year, the Canadian team was not bound by such arrangement and could make any offer it wished and hope the outcome would be positive. The Edmonton, Alberta, team of the Canadian Football League has offered the following contract to Berry Hart:

Canadian Football League

• CAN$1,447,368 immediate signing bonus
• CAN$2,083,333 at the end of each year for the next three years.
• The current exchange rate is CAN$1 = US$0.76
• Assume that the exchange rate in the next three years is CAN$1 = US$0.96

1. Rank the five offers in order of preference for Berry Hart, ranging from the best to the worst option, assuming a discount rate of 9 percent.
2. Elaborate further on the findings in Q1 in relation tothe concept of "time value of money".
3. Besides financial considerations, discuss other factors that Berry should consider before finalising his option in choosing the best offer for his career.
4. Report presentation:

Prepare the report with acceptable usage of grammar, language and style, and include all workings and formula.