You have taken a product management position within a major consumer goods firm after graduation. The contract
Question:
You have taken a product management position within a major consumer goods firm after graduation. The contract is for four years and your compensation package is as follows:
• $5,000 relocation expense
• $55,000 annual wage
• $10,000 bonus if annual goals are met
• $15,000 additional bonus at the end of four years if your team achieves a given market share
You are confident in your abilities and assume there is a 65% chance in receiving each annual bonus and a 75% chance in receiving the fourth year additional bonus.
The effective annual interest rate is 8.5% .
What is the net present value of your compensation package.
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey