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Question 9 A rookie quarterback is negotiating his first NFL contract. His opportunity...

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Accounting

Question 9
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. The terms of each contract are
as follows:
Contract 1,$3,500,000,$3,500,000,$3,500,000,$3,500,000
Contract 2,$2,500,000,$3,000,000,$4,000,000,$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.
Contract 3 gives the quarterback the highest present value; therefore, he should accept Contract 3.
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.
Contract 1 gives the quarterback the highest future value; therefore, he should accept Contract 1
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