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| Teaching Since: | Apr 2017 |
| Last Sign in: | 419 Weeks Ago |
| Questions Answered: | 3232 |
| Tutorials Posted: | 3232 |
MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
Sam Bradford, a number 1 draft pick of the St. Louis Rams, and his agent are evaluating three contract options. Each option offers a signing bonus and a series of payments over the life of the contract. Bradford uses a 10.25 percent rate of return to evaluate the contracts. Given the cash flows for each option, which one should he choose?
|
Year |
Cash Flow Type |
Option A |
Option B |
Option C |
|
0 |
Signing Bonus |
$3,100,000 |
54,000,000 |
$4,250,000 |
|
I |
Annual Salary |
$650,000 |
$825.00 |
$550,000 |
|
2 |
Annual Salary |
$715,000 |
$850.00 |
$625,000 |
|
3 |
Annual Salary |
$822,250 |
$925,000 |
$800,000 |
|
4 |
Annual Salary |
$975,000 |
$1,250,000 |
$900,000 |
|
5 |
Annual Salary |
31,100,000 |
 |
51,000,000 |
|
6 |
Annual Salary |
$1,250,000 |
 |  |
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1 Approved Answer