Reference no: EM132154507
The following are actual contracts signed by athletes:
a. $25,000,000 contract, payable at $2,500,000 per year for 10 years.
b. $25,000,000 contract, payable at $1,000,000 per year for 25 years.
c. $25,000,000 contract, payable at $1,562,500 per year for 16 years.
Determine the present value of each contract and indicate which contract you would prefer to have. Assume a 12% interest rate.