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PV of cash flow stream A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 9%. He has been offered three possible
PV of cash flow stream
A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 9%. 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 | $2,500,000 | $2,500,000 | $2,500,000 | $2,500,000 |
Contract 2 | $2,000,000 | $3,500,000 | $4,500,000 | $5,500,000 |
Contract 3 | $6,500,000 | $1,500,000 | $1,500,000 | $1,500,000 |
As his adviser, which contract would you recommend that he accept?
Select the correct answer.
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