Q No. 2 Khurram Ali is negotiating his employment contract. His opportunity cost is 15%. He has been offered two possible 4-year contracts. Payments are in Pakistani rupees and are guaranteed, and they would be made at the end of each year. Terms of each contract are as follows:

Contract

Year 1

Year 2

Year 3

Year 4

Contract 1

4 Million

4 Million

4 Million

4 Million

Contract 2

10 Million

1 Million

1 Million

1 Million

As his financial adviser, which contract would you recommend that he accept? (Total Marks 4)