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Evaluate the three alternative bonus plans

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Sally Hamilton has performed well as the chief financial officer of the Maxtech Computer Company and has earned a bonus. She has a choice among the following three bonus plans: (FV of $1 PV of $1 FVA of $1 PVA of $1 FVAD of $1 and PVAD of Si)

1. A $50,000 cash bonus paid now.

2. A $10.000 annual cash bonus to be paid each year over the next six years, with the first $10,000 paid now.

3. A three-year $22.000 annual cash bonus with the first payment due three years from now.

Required:

Question 1: Evaluate the three alternative bonus plans. Sally can earn a 6% annual return on her investments. (Round your answers to nearest whole dollar amount.)

Problem 1. What is the present value of the first alternative?

Problem 2. What is the present value of the second alternative?

Problem 3. What is the present value of the third alternative?

Reference no: EM132461462

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