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Homework answers / question archive / Margaret recently was offered a position with a major accounting form
Margaret recently was offered a position with a major accounting form. The form offered Margaret either a signing bonus of $25,000 payable on the first day of work or a signing bonus of $30,000 payable after two years of employment. Assuming that the relevant interest rate is 5%, which option should Margaret choose? Insufficient information to determine The options are equivalent. The signing bonus of $25,000 payable on the first day of work. The signing bonus of $30,000 payable after two years of employment. Question 2 2 pts When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of the cost to retail ratio because Othere may be no markdowns in a given year. markups are also ignored. None of these are correct this tends to result in the showing of a normal profit margin in a period when no markdown goods have been sold. this tends to give a better approximation of the lower of cost or net realizable value.
Solution 1:- Selected Answer is Correct.
Explantion:-
Present value of signing bonus after two year of employment = $30000 × 1/(1+0.05)2
=$27210.88
Because Present value is greater than value of signing bonus today ie $25,000 means Margenet will able to earn more in option of signing after two year of employment.
Solution 2:- Option ". This tends to give a better approximation of the lower of cost and net realizable value is Correct.