When deciding which contract to choose based on highest present value and a 10% discount rate, if billy and his agent think that tax rates are liekly to be higher in the future how might that sway his decision?   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 hhe 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.

When deciding which contract to choose based on highest present value and a 10% discount rate, if billy and his agent think that tax rates are liekly to be higher in the future how might that sway his decision?

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 hhe 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.