Present value Suppose you were just hired at a prestigious sales company. You have two options for your salary. You can get paid either on a commission basis or on a straight salary basis. If you choose to get paid on a commission basis, you only get paid once a year, in a lump sum payment at the end of the year. If you choose the straight salary, you get paid $5,000 at the end of every month.

You are very confident that, should you choose the commission option, you can earn commission of $70,000 per year. You, being wise in the ways of finance, decide to get the one that is worth the most to you now. Which option would you choose? How much value have you added by choosing this method?

Assume an APR of 9 %, compounded monthly.