Question: A creative general manager has offered two different contracts to a vain quarterback. The contracts are shown below: CONTACT A CONTRACT B YEAR SALARY YEAR

A creative general manager has offered two different contracts to a vain quarterback. The contracts are shown below:

CONTACT A		CONTRACT B
YEAR	SALARY	YEAR	SALARY
0	$509,200.00	0	$301,750.00
1	$509,200.00	1	$301,750.00
2	$509,200.00	2	$810,800.00
3	$509,200.00	3	$810,800.00
4	$509,200.00	4	$810,800.00

The newspapers report the total dollars of the contract, so contract A will pay a total of $2,546,000.00, while contract B will pay $3,035,900.00. The player will select contract B as it has more publicity. The team can earn 6.00% on their investments, so let's determine the value of each contract.

What is the present value of contract A? What is the present value of contract B?

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