1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Mumz [18]
3 years ago
13

Your annual salary is $100,000. You are offered two options for a severance package. Option 1 pays you 6 months' salary now. Opt

ion 2 pays you and your heirs $6,000 per year forever (first payment at the end of this year.) If you are required return is 11%, which option should you choose?
1. How much is the value for alternative 1?
2. How much is the value of alternative 2?
Business
1 answer:
kotegsom [21]3 years ago
7 0

Answer:

Option 1 is more convenient.

Explanation:

Giving the following information:

The annual salary is $100,000. You are offered two options for a severance package. Option 1 pays you 6 months' salary now. Option 2 pays you and your heirs $6,000 per year forever

The present value of option 1 is:

PV= 6*100,000= $600,000

To calculate the present value of option 2 we need to use the present value formula of a perpetual annuity:

PV= Cash flow/i

PV= 6,000/0.11= $54,545

There is no doubt that option 1 is better.

You might be interested in
When managers work on creating conditions and systems to ensure that everything and everyone works together to achieve the organ
SVETLANKA909090 [29]

Answer: Organising

Explanation: Organising in management involves the role a manager plays to ensure that things are working effectively in an organization and that every department in the organization are working at their maximum best. In organising the manager puts everything in place for the smooth running of the organization.

7 0
3 years ago
Last month your average daily rate was $76.99, and you had 2,932 rooms occupied. You want to know how this compares to the same
poizon [28]

Answer:

85 less rooms this year than last

Explanation:

The number of rooms (n) occupied for this month last year is given by the Room Revenue ($231,470) divided by the daily rate ($76.72):

n=\frac{\$231,470}{\$76.72}\\n=3,017\\

The number of rooms occupied last year is larger than the number of rooms occupied this year by:

\Delta n = 3,017-2,932\\\Delta n = 85\ rooms

The hotel occupied 85 less rooms this year than last.

7 0
3 years ago
Dram shop laws fall under which liability
Inga [223]
<span>A Dram shop law or Dram Shop Act is a rule in 38 different states that makes those who sell alcohol to patrons who are clearly far too intoxicated or too close to being dangerously over the limit are strictly liable for any injuries or damages caused by said drunk person. This is a Civil Liability.</span>
4 0
3 years ago
Craigmont uses the allowance method to account for uncollectible accounts. its year-end unadjusted trial balance shows accounts
xeze [42]

Amount of bad debts adjusting entry = 0.7% * 945,000 = 0.7/100 * 9450,000 = $6,615

The amount of the bad debts expense adjusting entry = $6,615

7 0
3 years ago
Read 2 more answers
1. Why are fewer customers entering local bank branches?(Select all that apply)
ExtremeBDS [4]

Answer:

2.a. new account and loans, 3. b. make a deposit

4 0
2 years ago
Other questions:
  • Which of the following is the number of people receiving Social Security payments? 55 million 58 million 66 million 71 million
    11·2 answers
  • Suppose that Larimer Company sells a product for $24. Unit costs are as follows:
    14·1 answer
  • A marketing research is most likely to serve as a _____ in a new product development team. functional representative process man
    13·1 answer
  • All but one of the following is included in partnership winding up activities: a. Signing new contracts for the partnership. b.
    8·1 answer
  • Andrew and Eunice are married filing jointly with AGI of $48,000. They contributed $1,800 to a qualified retirement plan. How mu
    6·1 answer
  • Consists of people, equipment, and procedures to gathr, sort, analyze and distribute needed, timely and accurate information to
    12·1 answer
  • Tore Company's records reveal the following information regarding its inventory. Beginning inventory was $100,000 at cost and 16
    14·1 answer
  • A(n) __________ is the chance that someone or something could be harmed by a hazard.. Select one: a. recovery plan b. assessment
    10·1 answer
  • A good system of internal control for cash provides adequate procedures for protecting both cash receipts and cash disbursements
    7·2 answers
  • If you help with my question i will get you brainlist
    8·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!