The director of marketing of your organization asks for your advice regarding sponsorship deals she is contemplating. She has to choose between the following: a 7-year sponsorship paying $100,000 per year; a 15-year sponsorship initially paying $75,000 per year with a rate of 5%; and a 20-year sponsorship initially paying $45,000 per year but with a rate of 12%.

1. Determine the present value of each proposal.
2. Which proposal should the marketing director choose?
3. What questions about her firm and about the potential sponsors should she contemplate?
4. How do these questions affect the decision? Fully explain your answer.