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Growing Annuities Tom Adams has received a job offer from a large investment bank as a clerk to an associate banker. His base salary will be $63,000. He will receive his first annual salary payment one year from the day he begins to work. In addition, he will get an immediate $10,000 bonus for joining the company. His salary will grow at 3.8 percent each year. Each year he will receive a bonus equal to 10 percent of his salary. Mr. Adams is expected to work for 25 years. What is the present value of the offer if the discount rate is 8.5 percent?

(Base Salary $63,000.00 Bonus $10,000.00 Discount Rate 8.5% Growth Rate of Salary 3.8% Bonus Rate 10.0% First Payment Year 1 Last Payment Year 25 )

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92057005

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