Question

You are considering changing jobs. Your goal is to work for three years and then return to school full-time in pursuit of an advanced degree. A potential employer just offered you an annual salary of $41,000, $43,000, and $46,000 a year for the next three years, respectively. All salary payments are made as lump sum payments at the end of each year. The offer also includes a starting bonus of $3,000 payable immediately. What is this offer worth to you today at a discount rate of 6.75%?

A. $11,406.
B. $114,545.
C. S116,956.
D. $120,212.
E. S133,697.

Answer 1

C. S116,956.

Step-by-step explanation:

The computation of the offer worth today is shown below:

Particulars 0 1 2 3 Total

Salary 3000 41000 43000 46000

PVIF at 6.75% 1.0000 0.9368 0.8775 0.8220

Present value 3000 38407.49 37733.99 37814.14 116956