Ron has just been drafted by a new start-up professional sports league. He has been in negotiations with the organization over his contract terms. Below are the following deals the organization is offering Ron: (assume all money is guaranteed):

• Proposal One -4-year deal paying $1,000,000 per year
• Proposal Two -10-year deal paying $400,000 per year and increasing 5% per year

1. Determine the total present value of each proposal. For each proposal, assume a discount rate of 8%.

1. Based solely on present value, which contract proposal should Ron choose?

1. What other factors beyond present value should Ron consider when making his decision?