Question

value: 2.00 points You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $85,000 per year for the next two years, or you can have $74,000 per year for the next two years, along with a $30,000 signing bonus today. The bonus is paid immediately, and the salary is paid in equal amounts at the end of each month. If the interest rate is 9 percent compounded monthly, what is the PV for both the options? (Do not round intermediate calculations and round your answers to 2 decimal places, e... 32.16.) PV Option 1 Option 2 Hints References eBook & Resources eBook 61. Future and Present Values of Multiple Cash Flows Check my work

Answer 1

Option 1:-   

=($85000*2)/24 = $7083.33333333 per month.

Present Value= 7083.3333333 * PVAF @ 9% for 24 terms

= 7083.3333333 * 9.7066117687

=$68,755.17

Option 2:-

=($74000*2)/24 = $6166.66666666 per month.

Present Value of $74,000   = 6166.66666666 * PVAF @ 9% for 24 terms

= 6166.66666666 * 9.7066117687

= $59,857.44

Present Value = $59,857.44 + $30,000 (Bonus)

= $89,857.44