Quaker State Inc

question 12

Multiple Choice

Quaker State Inc.offers a new employee a lump-sum signing bonus at the date of employment.Alternatively,the employee can take $8,000 at the date of employment plus $20,000 at the end of each of his first three years of service.Assuming the employee's time value of money is 10% annually,what lump sum at employment date would make him indifferent between the two options?

• A)$23,026.
• B)$57,737.
• C)$62,711.
• D)None of these answer choices is correct.

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Definitions:

Millions

A numeric unit indicating one thousand thousand (1,000,000) of any quantity.

Net Working Capital

The difference between a company’s current assets and its current liabilities, indicating short-term financial health.

Taxable Income

The amount of income subject to tax, after all deductions and exemptions are taken into account.

Net Capital Spending

The total spending on fixed assets less the proceeds from the sale of fixed assets, indicating a company's investment in physical assets.