In: Finance
our dream is to take up a job that basically provides wages that
has a present value of at least $2,000,000 today (Ignoring taxes).
Other words, you want the present value of all net future earning
to be greater than 2 million. You want to feel like a millionaire
today!
You just completed your master of science in biochemistry and a
large bio-medical company wants to hire you. Their offer is as
follows: Annual salary of $200,000 starting one year from today.
However, they will only offer a contract for twenty years, and they
will not guarantee if they can renew your contract. Also, they want
you to complete an MBA in your second year and third year while
working with them (t=2 and t=3). You must pay for that education
(they do not cover education expenses). However, since your first
annual paycheck is one year from today (t=1), they are willing to
give a contract signing bonus of $100,000 today (if you sign the
contract today).
You did some research and realized that you can complete your MBA
with Sam Houston State University with a cost of $15,000 per year
for two years. You also assume a conservative interest rate of 4%
for this calculation. What is the NPV of these cash flows.
(Note: 1.5X credit)
$2,590,861.98 |
||
$2,790,861.98 |
||
$2,818,065.27 |
||
$2,788,065.27 |
||
$3,970,000.00 |
help me please!!!
Solution :
The NPV of the cash flows is = $ 2,790,861.98
The solution is option 2 = $ 2,790,861.98
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.