Q. A star Wall Street trader is negotiating his 1st contract. His opportunity cost is= 10%. He has been presented the 3 year contracts which are given below. Payments are assured also they would be made at the ending of each year.
Year 1 Year 2 Year 3
Contract 1 $3,000,000 $3,000,000 $3,000,000
Contract 2 $2,000,000 $3,000,000 $4,000,000
Contract 3 $5,000,000 $1,000,000 $2,000,000
Which contract would you suggest that he accept? Describe why in detail.