You have recently accepted a one-year employment term by a firm. The firm has given...
70.2K
Verified Solution
Link Copied!
Question
Finance
You have recently accepted a one-year employment term by a firm. The firm has given you the option of receiving your salary as a lump sum value of $32,000 at the end of the year or as 12 monthly payments of $2,400 starting one month after you start work. If your relevant discount rate is 2 percent per month, then which salary options would you prefer?
1 The lump sum payment, since it has the smaller future value.
2 Monthly payments, since you do not have to wait so long to receive your money.
3 Either one, since they have the same present value.
4 The lump sum payment, since it has the larger present value
5 Monthly payments, since it has the larger present value.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
