You\'ve just joined the investment banking firm of Dewey, Cheatum, and Howe. The

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 $193,000 per year for the next two years, or you can have $75,000 per year for the next two years, along with a $40,000 signing bonus today. The bonus is paid immediately, and the salary is paid at the end of each year.

Required:

(a)If the interest rate is 9 percent compounded monthly, what is the present value of the first arrangement?

(b) If the interest rate is 9 percent compounded monthly, what is the present value of the second arrangement?

Explanation / Answer

A) the present value of the first arrangement WILL BE 161,315.46$

B) the present value of the second arrangement WILL BE 62,687.36$

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