Question

Our organic fish company pays $8,000 in monthly salary to its general manager. The company has a profit-sharing plan that results in the GM receiving an end-of-year bonus totalling $25,000. Draw the cash-flow diagram representing the salary payments if

b. the salary is paid at the beginning of the month.In both cases, assume that the bonus is always paid on December 31, and use P for present worth. Determine the equivalent annual salary of the GM if the nomi- nal market interest rate is 10% (nominal rate means on an annual basis; we don’t know if this has some different equivalent rate for compound-

ing on a more frequent basis).

Our organic fish company pays $8,000 in monthly salary to its general manager. The company has a profit-sharing plan that results in the GM receiving an end-of-year bonus totalling $25,000. Draw the cash-flow dia- gram representing the salary payments if

a. the salary is paid at the end of month.

b. the salary is paid at the beginning of the month.In both cases, assume that the bonus is always paid on December 31, and use P for present worth. Determine the equivalent annual salary of the GM if the nomi- nal market interest rate is 10% (nominal rate means on an annual basis; we don’t know if this has some different equivalent rate for compound-

ing on a more frequent basis).

Answer 1