Check My Work (1 remaining) Click here to read the eBook: Uneven Cash Flows PV OF...

Check My Work (1 remaining) Click here to read the eBook: Uneven Cash Flows PV OF CASH FLOW STREAM A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 6%. 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 $2,500,000 $2,500,000 $2,500,000 $2,500,000 Contract 2 $2,500,000 $3,500,000 $4,500,000 $5,000,000 Contract 3 $7,000,000 $1,500,000 $1,500,000 $1,500,000 As his adviser, which contract would you recommend that he accept? Select the correct answer. a. Contract 1 gives the quarterback the highest present value; therefore, he should accept Contract 1. b. Contract 2 gives the quarterback the highest present value; therefore, he should accept Contract 2. c. Contract 1 gives the quarterback the highest future value; therefore, he should accept Contract 1. d. Contract 3 gives the quarterback the highest future value; therefore, he should accept Contract 3. e. Contract 3 gives the quarterback the highest present value; therefore, he should accept Contract 3.

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