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Marrrta [24]
2 years ago
13

Mr. Ananta Jalil has received a job offer from a large investment bank as an assistant to the vice

Business
1 answer:
Nookie1986 [14]2 years ago
6 0

The present value of the offer is $145,466.83

<h3>What is the present value?</h3>

The first step is to determine the present value of the growing annuity. The formula that would be used is:

\frac{P}{r - g} x [1 - \frac{1 + g}{1 + r} ^{n} ]

Where:

  • p = base salary
  • r = discount rate
  • g = growth rate
  • n = number of years

$35,000 / (0.12 - 0.04) = 437,500

1 - (1.04/0.12)^5 = 0.31

0.31 x 437,500 = $135,466.83

Present value =  $135,466.83 + $10,000 =  $145,466.83

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