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You�ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They�ve offered you two different salary arrangements. You can have $8,500 per month for the next three years, or you can have $7,200 per month for the next three years, along with a $38,500 signing bonus today. Assume the interest rate is 8 percent compounded monthly.
You�ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They�ve offered you two different salary arrangements. You can have $8,500 per month for the next three years, or you can have $7,200 per month for the next three years, along with a $38,500 signing bonus today. Assume the interest rate is 8 percent compounded monthly.
With asalaryof $8,500 per month for three years is the better choice as it has a higher future value of $348,139.42 compared to $333,667.20 including the signing bonus.To compare the two salary arrangements, we need to calculate the future value of each option and compare them.Option 1: $8,500 per month for 36 months.Using the future value of an ordinaryannuityformula, the future value of this option is:FV1 = $8,500 * ((1 + 0.08/12)^36 - 1) / (0.08/12) = $348,139.42Option 2: $7,200 per month for 36 months, with a $38,500 signing bonus.Using the future value of an ordinary annuity formula, the future value of the monthly payments is:FV2 = $7,200 * ((1 + 0.08/12)^36 - 1) / (0.08/12) = $295,167.20The signing bonus is already a lump sum and doesn't need compounding.Total future value of Option 2 = FV2 + Signing bonus = $295,167.20 + $38,500 = $333,667.20Comparing the future values, Option 1 has a higher value of $348,139.42 compared to Option 2's $333,667.20. Therefore, choosing Option 1 with a salary of $8,500 per month for the next three years would be the better choicefinancially.To know more aboutsalary,brainly.com/question/33169547##SPJ11...