Question
Ben started working in Texas as a software engineer. The company has agreed to a total salary of $100,000 with a fixed base salary of
Ben started working in Texas as a software engineer. The company has agreed to a total salary of $100,000 with a fixed base salary of $70,000 and a variable pay component of $30,000 as a performance bonus with various perks. Ben plans to put that bonus amount after each year in the bank. Ben gets his $30,000 after his first year. Unfortunately, due to the recent economic collapse, the performance bonus was revised and reduced with a 10% rate of change each year for the next few years. Ben thinks it's best to stick to this job due to the economic volatility. Assuming an annual interest rate of 8% from the bank, Ben computed his present worth as $110,850. How long did the economic turmoil last?
Draw a cash flow diagram.
Denote the downward arrow as a negative cash flow.
Denote the upward arrow as a positive cash flow.
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