Problem 5-35 Comparing Cash Flow Streams [LO 1]

Youve just joined the investment banking firm of Dewey, Cheatum, and Howe. Theyve offered you two different salary arrangements. You can have $8,400 per month for the next two years, or you can have $7,100 per month for the next two years, along with a $38,000 signing bonus today. Assume the interest rate is 7 percent compounded monthly.

a.	If you take the first option, $8,400 per month for two years, what is the present value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b.	What is the present value of the second option? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Problem 5-35 Comparing Cash Flow Streams (LO 1] You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $8,400 per month for the next two years, or you can have $7,100 per month for the next two years, along with a $38,000 signing bonus today. Assume the interest rate is 7 percent compounded monthly. a. If you take the first option, $8,400 per month for two years, what is the present value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value of the second option? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) X Answer is complete but not entirely correct. a. 272,046.30 Value of first option Value of second option b. $ 267,943.90 X