Question

In: Finance

You are considering two job offers that are equivalent in everyway except for the bonus....

You are considering two job offers that are equivalent in every way except for the bonus. Alpha Industries offers a bonus paid on the first day of $5,000 and Zeta Consolidated offers a bonus paid at the end of the first year of $5,150. You assume you can earn 2.90% on a 1-year investment. The more valuable choice is:


A.

Alpha Industries.


B.

Zeta Consolidated.


C.

The value of the bonuses is equivalent.

Solutions

Expert Solution

Present value of bonus paid by Alpha Industries = $5000

Present value of bonus paid by Zeta = $5150/1.029 = $5004.86

Hence the more valuable choice is

B.

Zeta Consolidated

jeff jeffy answered 2 years ago
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