Your boss has just congratulated you on the wonderful job you did this year. In order to formally recognize your achievements, he would like to either give you a bonus or increase your salary. If you take the bonus, you will receive $5,000 immediately.
The salary increase would be a 1.5% addition to the 40,000 per annum you currently receive, payable at each year-end. In either event, you must pay taxes at a rate of 44% and plan to work at this company for the next 10 years. If you can invest any earning at a rate of 7%, which should you choose? Get Finance homework help today