Question
You've just joined an investment banking firm. They've offered you two different salary arrangements. Option 1 is $7,900 per month for the next three years,
You've just joined an investment banking firm. They've offered you two different salary arrangements. Option 1 is $7,900 per month for the next three years, or Option 2 is $6,600 per month for the next three years, along with a $35,500 signing bonus today. Assume the interest rate is 5 percent compounded monthly. Which option would you prefer?
a) Option 2 because it's better to have money today
b) Option 1 because its PV is $7,875 more than Option 2
c) Option 2 because its FV is more than Option 1
d) Option 1 because its accumulated monthly salary more than makes up for the signing bonus
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