You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $7,900 per month for the next three years, or you can have $6,600 per month for the next three years, along with a $35,500 signing bonus today. Assume the interest rate is 5 percent compounded monthly. a. If you take the first option, $7,900 per month for three years, what is the present value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value of the second option? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) A value of first option B Value of Second Option
You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $7,900 per month for the next three years, or you can have $6,600 per month for the next three years, along with a $35,500 signing bonus today. Assume the interest rate is 5 percent compounded monthly. a. If you take the first option, $7,900 per month for three years, what is the present value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value of the second option? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) A value of first option B Value of Second Option
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 4P
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You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $7,900 per month for the next three years, or you can have $6,600 per month for the next three years, along with a $35,500 signing bonus today. Assume the interest rate is 5 percent compounded monthly. |
a. |
If you take the first option, $7,900 per month for three years, what is the present value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | What is the present value of the second option? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
A value of first option
B Value of Second Option
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