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QUESTION

Show the inputs to solve for the PV of each contract; identify which contract you recommend the rookie

Show the inputs to solve for the PV of each contract; identify which contract you recommend the rookie

accept?

PV of a Cash Flows Stream: A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 7%. 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: $3,000,000    $3,000,000 $3,000,000     $3,000,000

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