Paul Pogba, who plays football for Manchester United in the English Premier League, has been offered two football boot endorsements as per below.
Option 1 - a single payment of US$15 million now by Nike
Option 2 - US$7.5 million per year at the end of the next three years by Adidas
The estimated cost of capital is 8.5%
 

a.Which offer is most attractive? Please analyze both offers using the NPV and IRRmethods.
b.Which is the most reliable method of analyzing the relative value of projects namely NPVor IRR? Please explain your reasoning.

Answer rating: 100% (QA)

a To analyze both offers using the NPV method we need to calculate the present value of each cash flow and compare them For Option 1 The single paymen... View the full answer