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Problem:

You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $193,000 per year for the next two years, or you can have $75,000 per year for the next two years, along with a $40,000 signing bonus today. The bonus is paid immediately, and the salary is paid at the end of each year.

Required:

Question 1: If the interest rate is 9 percent compounded monthly, what is the present value of the first arrangement?

Question 2: If the interest rate is 9 percent compounded monthly, what is the present value of the second arrangement?

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91163410

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