Question

In: Finance

II. Bonus Versus Stock A. The company has offered you a $5,000 bonus, which you may...

II. Bonus Versus Stock A. The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why? B. What are the advantages and disadvantages of each option? Be sure to support your answers. C. What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

Solutions

Expert Solution


Related Solutions

The company has offered you a $5,000 bonus, which you may receive today, or 100 shares...
The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why? What are the advantages and disadvantages of each option? What would you ultimately choose to do? What is your funancial reasoning behind this choice?
You have just accepted a job offer, which came with a signing bonus of $5,000 to...
You have just accepted a job offer, which came with a signing bonus of $5,000 to be paid today in your retirement account. Your employer will also contribute an extra $10,000 at the end of each full year (you start work tomorrow!). If this account is expected to earn 10% p.a. compounded semi-annually, which number is closest to the amount of money will you have in that account after five years? (including the payment for that year). A) $59,500 B)...
You have been offered a job with an unusual bonus structure. As long as you stay...
You have been offered a job with an unusual bonus structure. As long as you stay with the​ firm, you will get an extra $72,000 every seven​ years, starting seven years from now. What is the present value of this incentive if you plan to work for the company for 42 years and the interest rate is 6.2% ​(EAR)? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.)
You have been offered a job with an unusual bonus structure. As long as you stay...
You have been offered a job with an unusual bonus structure. As long as you stay with the​ firm, you will get an extra every seven​ years, starting seven years from now. What is the present value of this incentive if you plan to work for the company for years and the interest rate is ​(EAR)? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.) The present value of this incentive is ​$
Big Bonus or Bigger Bonus: Comparing Future Values CONGRATULATIONS!!!  You have just been offered your dream job...
Big Bonus or Bigger Bonus: Comparing Future Values CONGRATULATIONS!!!  You have just been offered your dream job after graduating   from Jacksonville University.  In response to your negotiations concerning your compensation package, the company has offered you a couple of different stock options in addition to the agreed upon salary. Under the first option, you would receive stocks with a value of $2,000,000 at the end of each year.  This option also includes an additional $4,000,000 bonus that you would receive for staying at...
Which of the following is not a reason for which a company may purchase treasury​ stock?...
Which of the following is not a reason for which a company may purchase treasury​ stock? A. to increase net assets by buying low and selling high B. to avoid a takeover by an outside party by increasing the number of outstanding shares that have voting rights C. to support the​ company's stock price D. to reward valued employees with stock
​(Related to Checkpoint​ 5.2)   ​(Compoundinterest with​ non-annual periods​) You just received a bonus of ​$5,000. a.  ...
​(Related to Checkpoint​ 5.2)   ​(Compoundinterest with​ non-annual periods​) You just received a bonus of ​$5,000. a.  Calculate the future value of ​$5,000​, given that it will be held in the bank for 5 years and earn an annual interest rate of 6 percent. b.  Recalculate part ​(a​) using a compounding period that is​ (1) semiannual and​ (2) bimonthly. c.  Recalculate parts ​(a​) and ​(b​) using an annual interest rate of 12 percent. d.  Recalculate part ​(a​) using a time horizon...
If you were offered a position with a company which would allow you to take the...
If you were offered a position with a company which would allow you to take the position as either a W2 employee or an independent contractor as a 'consultant' explain which one you would choose under these circumstances and why: - The job pays $100,000 per year paid monthly. One month vacation for both 1099 & W2. Job stability is equal regardless of which option you choose. No other benefits beyond what is required by Federal Law. You are in...
Ms. Higden has been offered yet another incentive scheme. She will receive a bonus of $500,000...
Ms. Higden has been offered yet another incentive scheme. She will receive a bonus of $500,000 if the stock price at the end of the year is $120 or more; otherwise she will receive nothing. (Don’t ask why anyone should want to offer such an arrangement. Maybe there’s some tax angle.) What combination of options would provide these payoffs? (Hint: You need to buy a large number of options with one exercise price and sell a similar number with a...
Joseph York has been investing his annual $5,000 bonus received at the end of each year...
Joseph York has been investing his annual $5,000 bonus received at the end of each year for 15 years. He was very conscientious about making his deposits in his 9% account but because of the poor economic conditions that year, he did not receive a bonus to invest in year 10. How much does he have saved up at the end of the 15 years?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT