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.

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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
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