Question
Vishnal is a fledgling butler who has just graduated from a famous school. He is hired to be a butler at De Sainte-Coquille manor. Porcoline,
Vishnal is a fledgling butler who has just graduated from a famous school. He is hired to be a butler at De Sainte-Coquille manor. Porcoline, head of the manor, offers him two compensation packages. The first package is a $6 million offer which pays $1,200,000.00 a year for five years. The second package is a $6.3 million offer of $800,000.00 a year for four years and a bonus of $3.1 million in year 5. All of the payments will be made at the end of the year for both packages. Vishnal can earn 9 percent interest rate from his savings account.
What is the present value of the first compensation package offered by Porcoline?
If Vishnal agrees to work as a butler at De Sainte-Coquille manor, which compensation package should he pick?
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