Mubashir Ali is negotiating his employment contract...

Q No. 3 Mubashir Ali is negotiating his employment contract. His opportunity cost is 14%. He has been offered three possible 4-year contracts. Payments are in Pakistani rupees and are guaranteed, and they would be made at the end of each year. Terms of each contract are as follows:

 

Contract

Year 1

Year 2

Year 3

Year 4

Contract 1

4 Million

4 Million

4 Million

4 Million

Contract 2

7 Million

1 Million

1 Million

1 Million

Contract 3

9 Million

0.5 Million

0.5 Million

0.5 Million

 

As his financial adviser, which contract would you recommend that he accept?

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Financial Accounting 1 Answer Maria Azher

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