Sally Hamilton has performed well as chief financial officer of the Maxtech Computer Company and has earned a bonus. She has a choice among the following three bonus plans:
A $50,000 cash bonus paid now.
A $10,000 annual cash bonus to be paid each year over the next six years, with the first $10,000 paid now.
A three-year $22,000 annual cah bonus with the first payment due three years from now.
Sally can earn a 6% annual return on her investments.
Evaluate the three alternative bonus plans, posting your questions and insights for the class.