Assume you just accepted a new job offer and you are negotiating your contract. You are...

Assume you just accepted a new job offer and you are negotiating your contract. You are offered the opportunity to take deferred salary. Would you accept this offer? Why or why not? If not, under what circumstances would you consider accepting a deferred salary?

If you were the owner of a business, would you want to pay your employees a deferred salary? Why or why not?

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Expert Solution

I would not be accepting deferred salary because deferred salary will be involving a time value of money element and I will be losing upon the the value of money if I am deferring my payment so if I am to receive the salary at a later stage then and the overall present value of the salary would be lower and hence I would be refraining from deferring my salary due to time value of money component.

I can defer my salary in case the company will be offering with appreciation on salaries higher than the loss due to time value of money or there would be Zero interest or negative interest regime in market.

If I am owner of a company,I would be trying to pay my employee deferred salary because it will be helping the company in improving the cash conversion cycle and it will be improving the liquidity of the company and it will also help in company having lower cost due to time value of money concept and employee will be suffering.

jeff jeffy answered 1 year ago

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