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1) 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 and 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.

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