Reference no: EM133110749

Congratulations, you have been hired. Your starting date is July 1, 2020 and your annual salary after-taxes are $70,000. You have also been offered a bonus to be paid at the end of the fiscal year (6/30/2021) that will equal 1/1000 of the firm's operating profit which is forecasted to equal $6.0 million. Assume the risk-free rate of interest is 1%/year, the expected return on a stock portfolio (Rm) is 8%/year, the firm's asset beta is 0.8, their equity beta is 1.1, and their cost of debt is 3%/year. Provide the appropriate equation, with all of the necessary inputs, that you would use to estimate the present value of the first year's compensation (valuation date: July 1, 2020).