1. Fresh out of college, you are negotiating with your prospective new employer. They offer you a signing bonus of exist100,000 today or a lump sum payment of exist130,000 three years from now. If you can earn 8% on your invested funds, which of the following is true?
Based on these numbers, you are indifferent between the two.
Take the signing bonus today because it has the higher present value.
Take the signing bonus today because it has the lower present value.
Take the lump sum payment because it has the lower present value.
Take the lump sum payment because it has the higher present value.
2. You have exist800 that you would like to invest. You have 2 choices: Savings account. A which earns 8% per year, compounded annually, or savings account B which earns 7.80% per year, compounded semiannually. Which would you choose and why?
B because it has a higher effective annual rate.
A because it has a higher effective annual rate.
I would be indifferent between A and B.
A because it has the higher quoted rate
B because it has the higher quoted rate.