Khurram Ali is negotiating his employment contract. His opportunity cost is 15%. He has been offered two 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
10 Million
1 Million
1 Million
1 Million
As his financial adviser, which contract would you recommend that he accept?
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