QUESTION 3 Gino, Conan, and Mickey just learned that their employers are paying

Question

QUESTION 3 Gino, Conan, and Mickey just learned that their employers are paying them a bonus if Conan gets $800 a year for the next 3 years. the end of 2 considering only the time-value of money. Assume a 10% annual interest rate. they pass their realtors exam. Gino gets $2,000 immediate) key gets $2.500 at the end of 2 years. Rank their bonus deals from best to worst (highest to lowe a. Mickey, Gino, Conan O b. Mickey, Conan, Gino O c. Gino, Mickey, Conan Od. Gino, Conan, Mickey e. Conan, Mickey, Gino

Explanation / Answer

Answer 3: The present value of all the three offers would be as follows: Present value of Gino's bonus would $2,000 as he is getting the money immediately. Present value of Conan's balance would be as follows: PV = =PV(rate,nper,pmt,fv,type) =PV(10%,3,-800,0,0) $1,989.48 where, Rate 10% Nper 3 Pmt -800 Fv 0 type 0 Present value of Mickey's bonus would be as follows: PV= =2,500*(1/((1+0.10)^2)) $2,066.12 Present value of Gino's bonus $             2,000.00 2 Present value of Conan's bonus $             1,989.48 3 Present value of Mickey's bonus $             2,066.12 1 Answer: Ranking : Mickey, Gino, Conan

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