1. 36.

Comparing cash flow streams [LO 6.1] You have just joined the investment banking firm of Dewey and Howe. They have offered you two different salary arrangements. You can have $85 000 per year for the next two years or you can have $74 000 per year for the next two years, along with a $20 000 signing bonus today. The bonus is paid immediately and the salary is paid in equal amounts at the end of each month. If the interest rate is 7 per cent compounded monthly, which do you prefer?