Question

You are considering a job offer. The job offers an annual salary of $52,000, $ 55,000,...

You are considering a job offer. The job offers an annual salary of $52,000, $

55,000, and $60,000 a year for

the next three years, respectively. The offer also includes a starting bonus of

$2,000 payable immediately.

What is this offer worth to you today at a discount rate of 6 percent?

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Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=2000+52000/1.06+55000/1.06^2+60000/1.06^3

which is equal to

=$150383.57(Approx)(Please note that intermediate calculations have not been rounded off].

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