Lauren is a recent environmental engineering graduate who has been offered a 5-year contract at a remote location. She has been offered two choices. The first is a fixed salary of $75,000 per year. The second has a starting salary of $65,000 with annual raises of 5% starting in Year 2. (For simplicity, assume that her salary is paid at the end of the year, just before her annual vacation.) If the interest rate is 8%, which option should she take? Tip: compare options from Present perspective

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Heres how to compare the two options from Laurens present value perspective considering an 8 interes... View the full answer