You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $8,500 per month for the next three years, or you can have $7,200 per month for the next three years, along with a $38,500 signing bonus today. Assume the interest rate is 8 percent compounded monthly.
Requirement 1:
If you take the first option, $8,500 per month for three years, what is the present value?
Requirement 2:
What is the present value of the second option?