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 $84,000 per year for the next two years, or you can have $73,000 per year for the next two years, along with a $29,000 signing bonus today. The bonus is paid immediately, and the salary is paid in equal amounts at the end of each month. If the interest rate is 10 percent compounded monthly, what is the PV for both the options

Answer 1

what is the PV for both the options?

Option 1 75847,99192

Option 2 94915,51679

Step-by-step explanation:

N Payment 1 IR 1+ir N PV

1 3500 1 0,83% 1,01 1,008333333 3471,07438

2 3500 1 0,83% 1,01 1,016736111 3442,387815

3 3500 1 0,83% 1,01 1,025208912 3413,938329

4 3500 1 0,83% 1,01 1,03375232 3385,723963

5 3500 1 0,83% 1,01 1,042366922 3357,742773

6 3500 1 0,83% 1,01 1,051053313 3329,992833

7 3500 1 0,83% 1,01 1,059812091 3302,472231

8 3500 1 0,83% 1,01 1,068643858 3275,179072

9 3500 1 0,83% 1,01 1,077549224 3248,111476

10 3500 1 0,83% 1,01 1,086528801 3221,26758

11 3500 1 0,83% 1,01 1,095583207 3194,645533

12 3500 1 0,83% 1,01 1,104713067 3168,243504

13 3500 1 0,83% 1,01 1,11391901 3142,059674

14 3500 1 0,83% 1,01 1,123201668 3116,092238

15 3500 1 0,83% 1,01 1,132561682 3090,33941

16 3500 1 0,83% 1,01 1,141999696 3064,799415

17 3500 1 0,83% 1,01 1,15151636 3039,470494

18 3500 1 0,83% 1,01 1,16111233 3014,350903

19 3500 1 0,83% 1,01 1,170788266 2989,438912

20 3500 1 0,83% 1,01 1,180544835 2964,732806

21 3500 1 0,83% 1,01 1,190382708 2940,230881

22 3500 1 0,83% 1,01 1,200302564 2915,931453

23 3500 1 0,83% 1,01 1,210305086 2891,832846

24 3500 1 0,83% 1,01 1,220390961 2867,933401

75847,99192

N Payment 1 IR 1+ir N PV

1 3.042 1 0,83% 1,01 1,008333333 3016,528926

2 3.042 1 0,83% 1,01 1,016736111 2991,598934

3 3.042 1 0,83% 1,01 1,025208912 2966,874976

4 3.042 1 0,83% 1,01 1,03375232 2942,355348

5 3.042 1 0,83% 1,01 1,042366922 2918,038362

6 3.042 1 0,83% 1,01 1,051053313 2893,922343

7 3.042 1 0,83% 1,01 1,059812091 2870,005629

8 3.042 1 0,83% 1,01 1,068643858 2846,286574

9 3.042 1 0,83% 1,01 1,077549224 2822,763545

10 3.042 1 0,83% 1,01 1,086528801 2799,43492

11 3.042 1 0,83% 1,01 1,095583207 2776,299095

12 3.042 1 0,83% 1,01 1,104713067 2753,354474

13 3.042 1 0,83% 1,01 1,11391901 2730,599478

14 3.042 1 0,83% 1,01 1,123201668 2708,03254

15 3.042 1 0,83% 1,01 1,132561682 2685,652106

16 3.042 1 0,83% 1,01 1,141999696 2663,456634

17 3.042 1 0,83% 1,01 1,15151636 2641,444596

18 3.042 1 0,83% 1,01 1,16111233 2619,614475

19 3.042 1 0,83% 1,01 1,170788266 2597,964769

20 3.042 1 0,83% 1,01 1,180544835 2576,493986

21 3.042 1 0,83% 1,01 1,190382708 2555,200647

22 3.042 1 0,83% 1,01 1,200302564 2534,083286

23 3.042 1 0,83% 1,01 1,210305086 2513,140449

24 3.042 1 0,83% 1,01 1,220390961 2492,370693

29000

94915,51679