Assume that your boss called you earlier this morning and told you that a bonus of $750 will be credited to your account today (you have opted for direct deposit). You received annual bonuses the last three years as well. The timeline of your bonus payments (ie., amount and when they are/were received) is provided below:

Date	March 24, 2019	March 24, 2020	March 24, 2021	March 24, 2022
Amount ($)	$500	$600	$650	$750

You have been depositing these bonuses into a separate "rainy day" checking account into which you have not made any other deposits. You have not withdrawn any money from this account either. If your account earns 2% interest, what will your account balance be after today's deposit is made?

 

Remember, your task is to discuss whether this scenario requires calculation of present value or future value, and why. You must also provide a final answer to the question asked, along with all supporting calculations. 

 

 

Scenario 2. Assume that your boss called you earlier this morning and told you that a bonus of $500 will be credited to your account today (you have opted for direct deposit). Your boss also tells you that, company performance permitting, you will receive bonuses the next three years as well. The timeline of your bonus payments (ie., amount and when they are to be received) is provided below:

Date	March 24, 2022	March 24, 2023	March 24, 2024	March 24, 2025
Amount ($)	$500	$600	$650	$750

You will deposit these bonuses into a separate "rainy day" checking account into which you will not make any other deposits. You will not withdraw any money from this account either. If your account earns 2% interest, what is the value today of the four expected deposits?

Answer rating: 100% (QA)

SCENARIO 1 This scenario requires the calculation of the future value of the bonuses deposited in the rainy day checking account including the bonus t... View the full answer