Description of this paper

Suppose you are offered a job contract




Suppose you are offered a job contract that specifies that you will work for 5 years and receive payment upon completion of the job. The firm allows you to negotiate the compensation mechanism, but not the length of the contract.;1. if the nominal interest rate is 10%, compute the annuity value of job A that makes you indifferent between receiving 250 000 at the end of 5 years or an annuity value.;2. what is the annuity value if the inflation rate is 4%?


Paper#21628 | Written in 18-Jul-2015

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