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A creative general manager has offered two different contracts to a vain quarterback. The contracts are shown below:
CONTACT A
CONTRACT B
YEAR
SALARY
0
$510,100.00
$306,275.00
1
2
$803,550.00
3
4
The newspapers report the total dollars of the contract, so contract A will pay a total of $2,550,500.00, while contract B will pay $3,023,200.00. The player will select contract B as it has more publicity. The team can earn 8.00% on their investments, so let's determine the value of each contract.
What is the present value of contract B?
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