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Case #4 Eric Fisher of Kansas City Chiefs Eric Fisher, a number 1 draft pick of the Kansas City Chiefs, and his agent are evaluating

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Case #4 Eric Fisher of Kansas City Chiefs Eric Fisher, a number 1 draft pick 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. Fisher uses a 10.25 percent rate of return to evaluate the contracts. Given the cash flows for each option, whish one should he choose? Year 0 1 2 3 4 Cash Flow Type Signing Bonus Annual Salary Annual Salary Annual Salary Annual Salary Annual Salary Annual Salary Option A Option B Option C $ 3,100,000 $4,000,000 $4,250,000 $ 650,000 $ 825,000 $ 550,000 $ 715,000 $ 850,000 $ 625,000 $ 822,250 S 925,000 $ 800,000 $ 975,000 $1,250,000 $ 900,000 $ 1,100,000 $ 1,000,000 $1,250,000 6

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