A business executive is offered a management jobat

Chapter , Problem 9-28

(choose chapter or problem)

A business executive is offered a management jobat Generous Electric Company, which offers him a 5-year contract that calls for a salary of $62,000per year, plus 600 shares of GE stock at the end ofthe 5 years. This executive is currently employed byFearless Bus Company, which also has offered hima 5-year contract. It calls for a salary of $65,000,plus 100 shares of Fearless stock each year. TheFearless stock is currently worth $60 per share andpays an annual dividend of $2 per share. Assumeend-of-year payments of salary and stock. Stockdividends begin one year after the stock is received.The executive believes that the value of the stockand the dividend will remain constant. If the exec-utive considers 9% a suitable rate of return in thissituation, what must the Generous Electric stockbe worth per share to make the two offers equallyattractive? Use the future worth analysis method inyour comparison.