What is the present value of compensation for each of jobs

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Reference no: EM132651401

You're in your final semester at NYU. You've just received two job offers.

Offer 1
YouTube Marketing Analyst

San Bruno, CA
Signing bonus: $10,000 (received upfront)
Starting Salary: $100,000
Expected Salary Growth per Year: 10%

Offer 2
Social Media Manager, Glossier

New York, NY
Signing bonus: $20,000 (received upfront)
Starting Salary: $85,000
Expected Salary Growth per Year: 20%

Interest Rates on Spanish government bonds

2 yr - 2%
3 yr - 3%
5 yr - 4%
10 yr - 6%
30 yr - 9%

Interest Rates on U.S. government bonds

2 yr - 3%
3 yr - 4%
5 yr - 5%
10 yr - 7%
30 yr - 10%

Assume all cash flows occur at the end of the year.

Question A. Assuming your interest in the two jobs, and the costs associated with each of them (moving costs, living costs, taxes etc.), are identical, which job should you choose? Assume that your decision will be to choose the job with the higher NPV of compensation. You plan on being in whichever job you pick for 5 years.

Question B. What is the present value of your compensation for each of these jobs through year 3?

Question C. Would your decision change if you plan on quitting and going back to graduate school in 2 years?

Question D. What possible information would make you reverse your decision in part A?

Reference no: EM132651401

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