When deciding on a contract based on present value and a discount rate of 10%, what other factors must be considered? Contract 1 $900,000 signing bonus $850,000 at the end of each year for the next 5 years Contract 2 $200,000 immediate signing bonus $100,000 at the end of each year for the next five years $150,000 a year at the end of years 5 through 10 $1,000,000 a year at the end of years 11 through 40 Contract 3 $1,000,000 immediate signing bonus $500,000 at the end of year 1 $1,000,000 at the end of year 2 $1,500,000 at the end of year 3 $2,500,000 at the end of year 4 As part of the third offer he was also promised a $200,000 bonus for any year in which he was selected to play in the Pro Bowl All Star game. his agent figured there was a 25% probability of that occuring in each of the next 4 years.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
When deciding on a contract based on
Contract 1
$900,000 signing bonus
$850,000 at the end of each year for the next 5 years
Contract 2
$200,000 immediate signing bonus
$100,000 at the end of each year for the next five years
$150,000 a year at the end of years 5 through 10
$1,000,000 a year at the end of years 11 through 40
Contract 3
$1,000,000 immediate signing bonus
$500,000 at the end of year 1
$1,000,000 at the end of year 2
$1,500,000 at the end of year 3
$2,500,000 at the end of year 4
As part of the third offer he was also promised a $200,000 bonus for any year in which he was selected to play in the Pro Bowl All Star game. his agent figured there was a 25% probability of that occuring in each of the next 4 years.
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