3. Mary is hired by ABC Company on 1/1/85. She is eligible to qualify for the company's new hire bonus program. If an employee qualifies at year-end, she will receive a cash bonus payable in two equal install- ments, half on January 1 and half on July 1. The first-year bonus is $2,000 and increases by $2,000 each year. Assuming Mary qualified each year (i.e., she received her first payments on 1/1/86) and deposited her bonus in an account that pays an 8% annual effective rate of interest, what is the accumulated value of her bonus payments through 7/1/90? A. Less than $33,500 B. At least $33,500, but less than $33,750 C. At least $33,750, but less than $34,000 D. At least $34,000, but less than $34,250 E. At least $34,250
3. Mary is hired by ABC Company on 1/1/85. She is eligible to qualify for the company's new hire bonus program. If an employee qualifies at year-end, she will receive a cash bonus payable in two equal install- ments, half on January 1 and half on July 1. The first-year bonus is $2,000 and increases by $2,000 each year. Assuming Mary qualified each year (i.e., she received her first payments on 1/1/86) and deposited her bonus in an account that pays an 8% annual effective rate of interest, what is the accumulated value of her bonus payments through 7/1/90? A. Less than $33,500 B. At least $33,500, but less than $33,750 C. At least $33,750, but less than $34,000 D. At least $34,000, but less than $34,250 E. At least $34,250
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 32P
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Question
Transcribed Image Text:3. Mary is hired by ABC Company on 1/1/85. She is eligible to qualify for the company's new hire bonus
program. If an employee qualifies at year-end, she will receive a cash bonus payable in two equal install-
ments, half on January 1 and half on July 1.
The first-year bonus is $2,000 and increases by $2,000 each year. Assuming Mary qualified each year (i.e.,
she received her first payments on 1/1/86) and deposited her bonus in an account that pays an 8% annual
effective rate of interest, what is the accumulated value of her bonus payments through 7/1/90?
A. Less than $33,500
B. At least $33,500, but less than $33,750
C. At least $33,750, but less than $34,000
D. At least $34,000, but less than $34,250
E. At least $34,250
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