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9-28 A business executive is offered a management job A at Generous Electric Company, which offers him a 5-year contract that calls for a salary
9-28 A business executive is offered a management job A at Generous Electric Company, which offers him a 5-year contract that calls for a salary of $62,000 per year, plus 600 shares of GE stock at the end of the 5 years. This executive is currently employed by Fearless Bus Company, which also has offered him a 5-year contract. It calls for a salary of $65,000, plus 100 shares of Fearless stock each year. The Fearless stock is currently worth $60 per share and pays an annual dividend of $2 per share. Assume end-of-year payments of salary and stock. Stock div- idends begin one year after the stock is received. The executive believes that the value of the stock and the dividend will remain constant. If the exce- utive considers 9% a suitable rate of return in this situation, what must the Generous Electric stock be worth per share to make the two offers equally attrac- tive? Use the future worth analysis method in your comparison 9-28 A business executive is offered a management job A at Generous Electric Company, which offers him a 5-year contract that calls for a salary of $62,000 per year, plus 600 shares of GE stock at the end of the 5 years. This executive is currently employed by Fearless Bus Company, which also has offered him a 5-year contract. It calls for a salary of $65,000, plus 100 shares of Fearless stock each year. The Fearless stock is currently worth $60 per share and pays an annual dividend of $2 per share. Assume end-of-year payments of salary and stock. Stock div- idends begin one year after the stock is received. The executive believes that the value of the stock and the dividend will remain constant. If the exce- utive considers 9% a suitable rate of return in this situation, what must the Generous Electric stock be worth per share to make the two offers equally attrac- tive? Use the future worth analysis method in your comparison
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