Question
Jason recently secured two different employment opportunities post-graduation.One of them is with a private company, the other is with the US Department of Treasury.Both of
Jason recently secured two different employment opportunities post-graduation.One of them is with a private company, the other is with the US Department of Treasury.Both of them are offering a starting salary of $100,000, equivalent benefits, and both expect to generate salary increases of 4% per year.Also assume that future employment opportunities will be equivalent irrespective of which offer is taken.The major difference between the two offers is that the private company is offering a signing bonus but the offer with the US government does not include one.However, under a new federal program, US government employees' student loan payments are limited to 10% of salary and any outstanding balance is forgiven (no longer owed) at the end of the ten year payment schedule.How large does the signing bonus from the private company need to be to offset the reduction in student loan payments that would result from taking the US Treasury job so that Jason is indifferent over the two jobs?Ignore taxes.
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