You have two job offers with the following 6-year compensation terms: the first one offers you $80,000 a year for 6 years; the other one offers you a signing bonus of $15,000 plus $50,000 a year for the first 4 years and then 60,000 a year for the last two years. Assume that the appropriate discount rate is 12% and there are no taxes. a. How much would you lose in present value if you accepted the second offer? b. Propose a change to the second offer that would make you indifferent between the two offers.

You have two job offers with the following 6-year compensation terms: the first one offers you $80,000 a year for 6 years; the other one offers you a signing bonus of $15,000 plus $50,000 a year for the first 4 years and then 60,000 a year for the last two years. Assume that the appropriate discount rate is 12% and there are no taxes. a. How much would you lose in present value if you accepted the second offer? b. Propose a change to the second offer that would make you indifferent between the two offers.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

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