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You are approaching your 10-year anniversary of employment, and the company your work for has promised...

You are approaching your 10-year anniversary of employment, and the company your work for has promised a bonus of $20,000 in two years’ time if you reach performance targets. In addition, the company has promised you another bonus of $40,000 seven years from today if your high standards of work performance continue. Interest rates are currently 5% and will stay at this level for four years. After four years, interest rates are expected to rise to 8%.

What is the present value of the promised bonuses?

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