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Case 3: Travis Kelce of Kansas City Chiefs. (20 points) Travis Kelce of the Kansas City Chiefs, and his agent are evaluating three contract options.

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Case 3: Travis Kelce of Kansas City Chiefs. (20 points) Travis Kelce of the Kansas City Chiefs, and his agent are evaluating three contract options. Each option offers a signing bonus and a series of payments over the life of the contract. Kelce uses a 10.50 percent rate of return to evaluate the contracts. Given the cash flows for each option, whish one should he choose? Year CF Type Option A Option B Option C 0 Signing Bonus $6,000,000.00 $11,000,000.00 $7,000,000.00 1 Annual Salary $650,000.00 $13,000,000.00 S14,250,000.00 2 Annual Salary $715,000.00 $13,000,000.00 $14,250,000.00 3 Annual Salary $822,250.00 $13,000,000.00 S14,250,000.00 4 Annual Salary $975,000.00 $13,000,000.00 $14,250,000.00 Annual Salary $55,000,000.00 2

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