Harvey Alexander an all league professional football player has just declared free agency. Two teams the San Francisco 49ers and the Dallas Cowboys have made Harvey the following offers to obtain his services; 49ers: $1 million signing bonus payable immediately and a salary of 1.5 million for the five year term of the contract

Cowboys: 2.5 million signing bonus payable immediately and an annual salary of 1 million for the five year term of the contract

With both contracts the annual salary will be paid in one lump sum at the end of the football season.

You have been hired as a consultant to Harveys agent Phil Marks to evaluate the two contracts. Write a short letter to Phil with your recommendation incusing the method you used to reach your conclusion. Assume that Harvey has no preference between the two teams and that the decision will be based entirely on monetary consideration. Also assume that Harvey can invest his money and earn an 8% annual return.

Answer rating: 100% (QA)

Dear Mr Marks RE Agent for Harvey Alexander I have reviewed both contracts for Mr Alexander and have ... View the full answer