1. She has been offered two choices. The first is a fixed salary of $80,000 per year. The second has ng salary of $70,000 with annual raises of 8% starting in Year 2. (For simplicity, assume that her s paid at the end of the year, just before her annual vacation.) If her interest rate is 10%, which she take?
1. She has been offered two choices. The first is a fixed salary of $80,000 per year. The second has ng salary of $70,000 with annual raises of 8% starting in Year 2. (For simplicity, assume that her s paid at the end of the year, just before her annual vacation.) If her interest rate is 10%, which she take?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suzanne is a recent chemical engineering graduate who has been offered a 5-year contract at a remote
O location. She has been offered two choices. The first is a fixed salary of $80,000 per year. The second has
a starting salary of $70,000 with annual raises of 8% starting in Year 2. (For simplicity, assume that her
salary is paid at the end of the year, just before her annual vacation.) If her interest rate is 10%, which
should she take?
Expert Solution
Step 1
According to the question, it is given that ..
The First fixed salary = $80,000 per year [Option -1]
The second salary starting = $70,000 (with annual raises 8% starting in year.) [Option -2]
Interest Rate = 10%
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