You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $7,000 per month for the next two years, or you can have $5,700 per month for the next two years, along with a $31,000 signing bonus today. Assume the interest rate is 6 percent compounded monthly. a. If you take the first option, $7,000 per month for two years, what is the present value? (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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $7,000 per month for the next two years, or you can have $5,700 per month for the next two years, along with a $31,000 signing bonus today. Assume the interest rate is 6 percent compounded monthly. a. If you take the first option, $7,000 per month for two years, what is the present value? (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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
CH.5 15
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 $7,000 per month for the
next two years, or you can have $5,700 per month for the next two years, along with a
$31,000 signing bonus today. Assume the interest rate is 6 percent compounded
monthly.
a. If you take the first option, $7,000 per month for two years, what is the present value?
(Do not round intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
b. What is the present value of the second option? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
X Answer is complete but not entirely correct.
Value of first option
2$
187,614.83 X
а.
b.
Value of second option
2$
196,579.21 X
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