PV of cash flow stream A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 7%. 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: 1 2 3 4 Contract 1 $3,500,000 $3,500,000 $3,500,000 $3,500,000 Contract 2 $2,500,000 $3,500,000 $4,000,000 $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 1 gives the quarterback the highest future value; therefore, he should accept Contract 1. Contract 1 gives the quarterback the highest present value; therefore, he should accept Contract 1. Contract 3 gives the quarterback the highest future value; therefore, he should accept Contract 3. Contract 2 gives the quarterback the highest present value; therefore, he should accept Contract 2. Contract 3 gives the quarterback the highest present value; therefore, he should accept Contract 3.