Choosing the Best Signing Bonus Option

Which signing bonus option should Daniel choose?

Final answer: Daniel should choose the option with the signing bonus of $26,500 payable after one year of employment.

To determine which signing bonus option Daniel should choose, we need to calculate the future value of each option using the relevant interest rate of 11%. For the first option, the future value of the $23,500 signing bonus payable on the first day of work can be calculated as follows:

Future Value (Option 1): $23,500 * (1 + 0.11)^1 = $26,085

For the second option, the future value of the $26,500 signing bonus payable after one year of employment can be calculated as follows:

Future Value (Option 2): $26,500 * (1 + 0.11)^1 = $29,515

Since the future value of the second option is higher, Daniel should choose the option with the signing bonus of $26,500 payable after one year of employment.

Choosing this option will allow Daniel to maximize the value of the signing bonus he receives, ultimately benefiting him in the long run. It's important to consider the time value of money and make decisions that align with your financial goals.