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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 $90,000 per year for the next two years, or you can have $77,000 per year for the next two years, along with a $20,000 signing bonus today. The bonus is paid immediately and the salary is paid in equal amounts at the end of each month. Assume the interest rate is 7 percent compounded monthly. a. If you take the first option, $7,500 per month for two years, what is the present value? Note: 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Present value b. Present value

You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $90,000 per year for the next two years, or you can have $77,000 per year for the next two years, along with a $20,000 signing bonus today. The bonus is paid immediately and the salary is paid in equal amounts at the end of each month. Assume the interest rate is 7 percent compounded monthly. a. If you take the first option, $7,500 per month for two years, what is the present value? Note: 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Present value b. Present value

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Hi there im confised pls help

You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $90,000 per year for the next two years, or you can have $77,000 per year for the next two years, along with a $20,000 signing bonus today. The bonus is paid immediately and the salary is paid in equal amounts at the end of each month. Assume the interest rate is 7 percent compounded monthly. a. If you take the first option, $7,500 per month for two years, what is the present value? Note: 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Present value b. Present value
Transcribed Image Text:You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $90,000 per year for the next two years, or you can have $77,000 per year for the next two years, along with a $20,000 signing bonus today. The bonus is paid immediately and the salary is paid in equal amounts at the end of each month. Assume the interest rate is 7 percent compounded monthly. a. If you take the first option, $7,500 per month for two years, what is the present value? Note: 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? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Present value b. Present value
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