Question
You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $185,000 per year
| You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $185,000 per year for the next two years, or you can have $70,000 per year for the next two years, along with a $40,000 signing bonus today. The bonus is paid immediately, and the salary is paid at the end of each year. |
Required:
| (a) | If the interest rate is 7 percent compounded monthly, what is the present value of the first arrangement? |
| (Click to select) 336,758.89 333,424.65 334,483.36 346,761.63 320,087.66 |
| (b) | If the interest rate is 7 percent compounded monthly, what is the present value of the second arrangement? |
| (Click to select) 159,514.25 166,160.68 167,822.28 166,561.27 172,807.1 |
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