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 listed below: 1 3 Contract 1 Contract 2 Contract 3 2 4 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $2,500,000 $3,000,000 $4,500,000 $5,500,000 $7,000,000 $1,000,000 $1,000,000 $1,000,000 As his adviser, which contract would you recommend that he accept? Select the correct answer. Contract 3 gives the quarterback the highest future value; therefore, he should accept Contract 3. Contract 1 gives the quarterback the highest future value; therefore, he should accept Contract 1. Contract 2 gives the quarterback the highest present value; therefore, he should accept Contract 2. Contract 1 gives the quarterback the highest present value; therefore, he should accept Contract 1.

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 listed below: 1 3 Contract 1 Contract 2 Contract 3 2 4 $3,000,000 $3,000,000 $3,000,000 $3,000,000 $2,500,000 $3,000,000 $4,500,000 $5,500,000 $7,000,000 $1,000,000 $1,000,000 $1,000,000 As his adviser, which contract would you recommend that he accept? Select the correct answer. Contract 3 gives the quarterback the highest future value; therefore, he should accept Contract 3. Contract 1 gives the quarterback the highest future value; therefore, he should accept Contract 1. Contract 2 gives the quarterback the highest present value; therefore, he should accept Contract 2. Contract 1 gives the quarterback the highest present value; therefore, he should accept Contract 1.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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: As his adviser, which contract would you recommend that he accept?
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 Contract 1 $2,500,000 $2,500,000 $2,500,000 $2,500,000 Contract 2 $2,000,000 $3,000,000 $4,000,000 $5,000,000 Contract 3 $6,500,000 $1,000,000 $1,000,000 $1,000,000 As his adviser, which contract would you recommend that he accept? Select the correct answer. O a. Contract 1 gives the quarterback the highest present value; therefore, he should accept Contract 1. b. Contract 1 gives the quarterback the highest future value; therefore, he should accept Contract 1. O . Contract 2 gives the quarterback the highest present value; therefore, he should accept Contract 2. O d. Contract 3 gives the quarterback the highest future value; therefore, he should accept Contract 3. O e. Contract 3 gives the quarterback the highest present value;…
A football is evaluating three contract options given to him. Each option offers a bonus and a series of payments over the life of the contract. The rate of return is 7.25% compounded anually to evaluate the options. Which contract should be chosen? Show your calculations. Year Cash flow Ever Football Club Heal Football Club Airy Football Club 0 bonus $3,500,000 $3,500,000 $3,500,000 1 Annual Salary $700,000 $850,000 $775,000 2 Annual Salary $750,000 $800,000 $775,000 3 Annual Salary $800,000 $750,000 $775,000 4 Annual Salary $850,000 $700,000 $775,000
You are negotiating a sports contract for your client. The client’s opportunity cost (interest rate) is 9%. He has been offered two possible 4 year contracts. Payments are guaranteed and will be made at the end of each year. The terms of each contract are as follows: Which contract will you choose? (Ch. 5) Year 1 Year 2 Year 3 Year 4 Contract 1 4,500,000 4,500,000 4,500,000 4,500,000 Contract 2 22,000,000 Group of answer choices Contract 1 Contract 2
Icahn Tackel just signed an $11.5 million, 4-year contract with an NFLteam. He received a signing bonus of $2 million; $1.5 million at the end ofyear 1; $3 million at the end of year 2; $3.5 million at the end of year 3; and$1.5 million at the end of year 4. What is the present value of his contract ifmoney can earn 4 percent per year?
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A baseball player is offered a 3-year contract which pays him the following amounts at the end of each year:Year 1: $6 millionYear 2: $8 millionYear 3: $10 millionInstead of accepting the contract, the player asks for a contract that has the team paying the same total amount, but payments are equal ($8 million a year) and come at the beginning of each year for the 3 years (3 total payments). Assuming that the appropriate discount rate is 8% per year, what is the difference in the present value of two offers?
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h If she expects to earn 8% annually, which is the best choice? - If she expects to earn 9% annually, which option would you recommend? d Explain how interest rates influence the optimal choice. Problem 6 PV OF A CASH FLOW STREAM. A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 10%. 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. +- 十 +一 - Contract 1 $3,000,000 $3,000,000 $3,000,000 $3,000,000 Contract 2 $2,000,000 $3,000,000 $4,000,000 $5,000,000 Contract 3 $7,000,000 $1,000,000 $1,000,000 $1,000,000 As his adviser, which contract would you recommend that he accept? Problem 7 EFFECTIVE VERSUS NOMINAL INTEREST RATES. Bank A pays 4% inte Compounded annually on deposits, while Bank B pays 3.5% compounded daily.
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