Option should you choose solely based on monetary value

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Reference no: EM132030913

You are given two salary options. Option A gives you $30,000 at the end of the first year, with raises of $5,600 each year thereafter. In option B, you receive $53,000 at the beginning of the first year, with raises of $3,800 each year thereafter. The contract period is 35 years for both options. Assume that the annual interest rate is 6% . Which option should you choose solely based on monetary value?

(Hint: First derive the formula for PV of the base P plus raises of Q each year).

Reference no: EM132030913

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