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The Kansas City Chiefs are deciding whether to offer a contract extension to Tyreek Hill. Suppose the contract would give him a signing bonus of

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The Kansas City Chiefs are deciding whether to offer a contract extension to Tyreek Hill. Suppose the contract would give him a signing bonus of $20 million up front (i.e. today) and $25 million annually over the next five years. If the expected cash inflows from signing him are $35 million, \$30 million, \$29 million, \$28 million, and \$27 million, respectively over the next five years, the expected IRR of signing Tyreek Hill is If the Kansas City Chiefs, required rate of return is 10 percent, the Kansas City Chiefs accept this contract. Based on the above information (using the Chiefs discount rate), the computed net present value of this contract offer must be (Hint: you should net out the inflows and outflows when calculating the IRR). (a) 8.73%; should; negative (b) 11.27%; should; positive (c) 8.73%; should not; positive (d) 11.27%; should not; negative

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