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: 2 3 4 Contract 1 Contract 2 Contract 3 As his adviser, which contract would you recommend that he accept? $3,000,000 $3,000,000 $3,000,000 $4,500,000 $3,000,000 $5,500,000 $3,000,000 $2,000,000 $7,000,000 $1,000,000 $1,000,000 $1,000,000

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
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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:
2
3
4
Contract 1
Contract 2
Contract 3
As his adviser, which contract would you recommend that he accept?
$3,000,000
$3,000,000
$3,000,000
$4,500,000
$3,000,000
$5,500,000
$3,000,000
$2,000,000
$7,000,000
$1,000,000
$1,000,000
$1,000,000
Transcribed Image Text: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: 2 3 4 Contract 1 Contract 2 Contract 3 As his adviser, which contract would you recommend that he accept? $3,000,000 $3,000,000 $3,000,000 $4,500,000 $3,000,000 $5,500,000 $3,000,000 $2,000,000 $7,000,000 $1,000,000 $1,000,000 $1,000,000
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