Andrew is contemplating between two three-year contract job opportunities. His first option guarantees him $100,000 per...

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Andrew is contemplating between two three-year contract job opportunities. His first option guarantees him $100,000 per year, while his second option offers him $50,000 + a bonus per year. Suppose that Andrew's bonus in the first year is $60,000, second year is $20,000, and last year is $80,000, then which job opportunity should Andrew go for? Assume that the discount rate is 5%. Show your calculations. Andrew is contemplating between two three-year contract job opportunities. His first option guarantees him $100,000 per year, while his second option offers him $50,000 + a bonus per year. Suppose that Andrew's bonus in the first year is $60,000, second year is $20,000, and last year is $80,000, then which job opportunity should Andrew go for? Assume that the discount rate is 5%. Show your calculations.

Answer rating: 100% (QA)

Present value of cash inflows in option 1 100000 per year Year Cash Infl... View the full answer