Tyreek Hill of the Kansas City Chiefs, and his agent are evaluating three contract options. Each...

 

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Tyreek Hill of the Kansas City Chiefs, and his agent are evaluating three contract options. Each option offers a signing bonus and a series of payments over the life of the contract. Hill uses a 10.375 percent rate of return to evaluate the contracts. Given the cash flows for each option, whish one should he choose? Year 0 CF Type Signing Bonus Option A $6,000,000.00 Option B $5,800,000.00 Option C $7,000,000.00 1 Annual Salary $ 650,000.00 $13,000,000.00 $10,800,000.00 2 Annual Salary $ 715,000.00 $13,000,000.00 $11,000,000.00 3 4 Annual Salary Annual Salary $ 822,250.00 $13,000,000.00 $11,200,000.00 $ 975,000.00 $13,000,000.00 $11,400,000.00 5 Annual Salary $20,000,000.00 $11,600,000.00 6 Annual Salary $30,000,000.00 Tyreek Hill of the Kansas City Chiefs, and his agent are evaluating three contract options. Each option offers a signing bonus and a series of payments over the life of the contract. Hill uses a 10.375 percent rate of return to evaluate the contracts. Given the cash flows for each option, whish one should he choose? Year 0 CF Type Signing Bonus Option A $6,000,000.00 Option B $5,800,000.00 Option C $7,000,000.00 1 Annual Salary $ 650,000.00 $13,000,000.00 $10,800,000.00 2 Annual Salary $ 715,000.00 $13,000,000.00 $11,000,000.00 3 4 Annual Salary Annual Salary $ 822,250.00 $13,000,000.00 $11,200,000.00 $ 975,000.00 $13,000,000.00 $11,400,000.00 5 Annual Salary $20,000,000.00 $11,600,000.00 6 Annual Salary $30,000,000.00

Answer rating: 100% (QA)

Option A PV 6000000 6500001010375 71500010103752 82225010103753 97500010103754 200... View the full answer