Question: Answer the following application questions. Be sure to show your work and explain your answers using full sentences and evidence where necessary. 11. An NFL

Answer the following application questions. Be sure to show your work and explain your answers using full sentences and evidence where necessary.

11. An NFL defensive lineman has been offered the following contract offers:

Contract A: $1,000,000 signing bonus, $1,000,000 year one salary, $1,100,000 year two salary, $1,200,000 year three salary.

Contract B: $800,000 signing bonus, $900,000 year one salary, $1,000,000 year two salary, $1,100,000 year three salary, $1,200,000 year four salary.

a)What are the face values of the contracts?

b)What discount rate would you use to calculate the present value of his contracts? Explain how you decided on the discount rate

c)What is the present value of his contracts? Show your work

d)What contract should he accept?

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