Question

Given two salary options, which option should you accept? #1: Paid $64,000 for first year and...

Given two salary options, which option should you accept?

#1: Paid $64,000 for first year and your salary is increases 3.70% yearly.

#2: Paid a starting bonus of $24,000 today. First-year salary will be $60,000 and it will increase 3.8% every year.

Market Interest Rate is 8.20% and job time is 10 years.

Homework Answers

Answer #2

1)

2)

PV of second option is $487,310.97 ($24,000+$463,310.97)

Hence, i should choose option 1 i.e. $64,000 in the first year. It has highest present value.

answered by: anonymous
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When hired at a new job selling jewelry, you are given two pay options: Option A:...
When hired at a new job selling jewelry, you are given two pay options: Option A: Base salary of $16,000 a year, with a commission of 6% of your sales Option B: Base salary of $23,000 a year, with a commission of 2% of your sales In order for option A to produce a larger income, you would need sell at least $ of jewelry each year.
Your first job out of college will pay you $61,000 in year 1 (exactly one year...
Your first job out of college will pay you $61,000 in year 1 (exactly one year from today), growing at a rate of 3.0% per year thereafter. You will also receive a one time bonus of $39,000 at the same time as your first salary. You plan to retire in 39 years (you'll receive 39 years of salary). If the applicable discount rate is 6%, what is the present value of these future earnings today? Round to the nearest cent.
You are comparing two investment options. Option A requires $10,000 on day 0, and pays five...
You are comparing two investment options. Option A requires $10,000 on day 0, and pays five annual payments starting with $5,000 the first year followed by four annual payments of $2,500 each. Option B also requires $10,000 on day 0, and pays five annual payments of $3,000 each. Using the incremental IRR approach, can you conclude which one of the following statements is correct given these two investment options? Given a positive rate of return, Option A has a higher...
Today is your 20th birthday and you must choose between two retirement options. The first option...
Today is your 20th birthday and you must choose between two retirement options. The first option will provide you with 15 equal annual payments of $75,000 beginning on your 65th birthday. The second option will provide you with one payment of $1,500,000 on your 70th birthday. If the interest rate is 7 percent per year and you are assured of living to at least 80 years of age, what is the present value of the first option (at your 20th...
You are a financial planner who is investigating the options for a 45-year old man who...
You are a financial planner who is investigating the options for a 45-year old man who wishes to have enough money to retire by the time he is 65. The man has just turned 45 and has received a sizable inheritance of $250,000. He has approached you to understand his financial situation and make an informed decision regarding his investment options for his financial future. His current financial arrangements are as follows: • His salary has just been increased to...
You just won $1 million dollars in the lottery! They offer you two options for your...
You just won $1 million dollars in the lottery! They offer you two options for your winnings: a lump sum payment right now, or $100,000 a year over the next 10 years. Current 10-year interest rates are at 5%, and the current tax on lottery winnings is 40%.   What is the amount you will receive today with the lump sum option? Which option would you select? How would you present your argument for your decision in a debate? Sorry, you...
1. Josh quits his job as a highly-paid college professor, earning $60,000 a year, in order...
1. Josh quits his job as a highly-paid college professor, earning $60,000 a year, in order to start a consultancy business. In his first year, his revenue is $200,000. His payments to suppliers of resources come to $85,000. His economic profit is ____________. A. $115,000 B. $55,000 C. $165,000 D. zero (as he is making a loss) 2.Sydney earned an annual income of $90,000 for a local employer. She quits her job and sets up a rival company. Her annual...
WEEK 4 FIN CORP (ASSNGMNET) SHOW YOUR CALCULATIONS FOR #7-#20. You have the option of performing...
WEEK 4 FIN CORP (ASSNGMNET) SHOW YOUR CALCULATIONS FOR #7-#20. You have the option of performing calculations manually BUT ARE STRONGLY ENCOURAGEDto use a financial calculator or spreadsheet. Either way, you must specify what is being calculated to earn credit: 1,If you are earning a salary of $42,000 in 2018 and expect to receive 4% raises per annum on January 1, what do you anticipate your salary will be in 2027? 2.What is the future value of $5,000 invested for...
This question has two parts Part 1 You are CFO of a major chain of restaurants...
This question has two parts Part 1 You are CFO of a major chain of restaurants called Chipotle. In an increasingly challenging business environment, Chipotle is considering an acquisition of its major competitor, Los Pollos Hermanos (LPH). Your research indicates that LPH is expected to generate a positive cashflow of $186 million per year for each of the next 20 years. The first of the annual cashflows will be received one year from today. You estimate that an appropriate opportunity...
This question has two parts Part 1 You are CFO of a major chain of restaurants...
This question has two parts Part 1 You are CFO of a major chain of restaurants called Chipotle. In an increasingly challenging business environment, Chipotle is considering an acquisition of its major competitor, Los Pollos Hermanos (LPH). Your research indicates that LPH is expected to generate a positive cashflow of $186 million per year for each of the next 20 years. The first of the annual cashflows will be received one year from today. You estimate that an appropriate opportunity...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT