You Are Considering Two Work Contracts, Each of Which Lasts

question 174

Essay

You are considering two work contracts, each of which lasts for five years. The two contracts are summarized in the following table. $$\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Contract } \\\text { One }\end{array} & \begin{array} { c } \text { Contract } \\\text { Two }\end{array} \\\hline 1 & \$ 25,000 & \$ 55,000 \\\hline 2 & \$ 35,000 & \$ 65,000 \\\hline 3 & \$ 45,000 & \$ 25,000 \\\hline 4 & \$ 55,000 & \$ 35,000 \\\hline 5 & \$ 65,000 & \$ 45,000 \\\hline\end{array}$$ Assume that you will be paid at the end of each year. Contract 1 includes a signing bonus of $5,000 to be paid at the beginning of year 1, whereas contract 2 does not include a signing bonus. If the interest rate is 5 percent, which is the better offer?

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Definitions:

Self-Appraisal

An evaluation process in which an individual assesses their own performance, strengths, and areas for improvement, typically within a professional context.

Appraisal Process

The sequence of steps involved in evaluating an employee's performance, typically involving feedback and discussions about achievements and areas for improvement.

Realistically

Pertains to recognizing and accepting the actual nature of a situation in a practical and sensible manner.

Performance Appraisals

A systematic evaluation of an employee's job performance and productivity in relation to pre-established criteria and organizational objectives.