Sally Hamilton has performed well as the chief financial officer of the Maxtech Computer Company and has earned a bonus. She has a choice among the following three bonus plans: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)A $50,000 cash bonus paid now.A $10,000 annual cash bonus to be paid each year over the next six years, with the first $10,000 paid now.A three-year $22,000 annual cash bonus with the first payment due three years from now.Required:Evaluate the three alternative bonus plans. Sally can earn a 6% annual return on her investments. (Round your answers to nearest whole dollar amount.)What is the present value of the first alternative?What is the present value of the second alternative?What is the present value of the third alternative?

Net present value: The net present value of money is the method that compares the present value of…

Answered: What is the present value of the first…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Sally Hamilton has performed well as the chief financial officer of the Maxtech Computer Company and has earned a bonus. She has a choice among the following three bonus plans: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

A $50,000 cash bonus paid now.
A $10,000 annual cash bonus to be paid each year over the next six years, with the first $10,000 paid now.
A three-year $22,000 annual cash bonus with the first payment due three years from now.

Required:
Evaluate the three alternative bonus plans. Sally can earn a 6% annual return on her investments. (Round your answers to nearest whole dollar amount.)