Garland inc. offers a new employee a single-sum signing bonus at the date of employment, june 1, 2018.

alternatively, the employee can receive $39,000 at the date of employment plus $10,000 each june 1 for five years, beginning in 2022.

assuming the employee's time value of money is 9% annually, what single amount at the employment date would make the options equally desirable? (a) $69,035. (b) $65,855.(c) $40,855.(d) $44,035.

option (A) $69,035

Explanation:

Data provided in the question:

Amount received at the time of joining = $39,000

Amount received each year = $10,000

Duration, n = 5 years

Time value of money, r = 9% = 0.09

Now,

The single-sum equivalent

= $39,000 + Present value of a $10,000 deferred annuity

also,

Present value of the deferred annuity = $10,000 ×

on substituting the respective values, we get

Present value of the deferred annuity = $10,000 ×

or

Present value of the deferred annuity = $10,000 × 4.23972

= $42,397

Equivalent amount at the time of joining of the differed annuity i.e n = 4 years before

= $42,397 × [ 1 ÷ (1 + r )ⁿ]

= $42,397 × [ 1 ÷ (1 + 0.09 )⁴]

= $42,397 × 0.70843

= $30,035

Hence,

The single-sum equivalent = $39,000 + $30,035

= $69,035

Hence,

The answer is option (A) $69,035

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

                                          hope it