Tom Adams has received a job offer from a large investment bank as a clerk to an
ID: 2640295 • Letter: T
Question
Tom Adams has received a job offer from a large investment bank as a clerk to an associate banker. His base salary will be $65,000. He will receive his first annual salary payment one year from the day he begins to work. In addition, he will get an immediate $15,000 bonus for joining the company. His salary will grow at 4.5 percent each year. Each year he will receive a bonus equal to 10 percent of his salary. Mr. Adams is expected to work for 20 years.
What is the present value of the offer if the discount rate is 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Tom Adams has received a job offer from a large investment bank as a clerk to an associate banker. His base salary will be $65,000. He will receive his first annual salary payment one year from the day he begins to work. In addition, he will get an immediate $15,000 bonus for joining the company. His salary will grow at 4.5 percent each year. Each year he will receive a bonus equal to 10 percent of his salary. Mr. Adams is expected to work for 20 years.
Explanation / Answer
the total salary income per year= $65,000 and immediate benefit of $15,000
if he works for next 20 years, his expected income per year will be
his net income approximately per year is $48100 and for next 20 years it is $96200
year salary PV@ 10% 2 67925 $59,085 3 70981 58630 4 74175 55705 5 77512 48135 6 85263 48088 7 93790 48114 8 103,169 48180