I. School versus Work
When deciding how to finance the school I would like to attend, the first thing I would do is check the current price of Apple’s stock using Yahoo! Finance, and figure out how much I would have if I were to sell all 1,000 shares that I own. As of 6/3/2016 at 10:15am, Apple’s stock is valued at $97.63 (Yahoo! Finance, 2009). Therefore, if I were to sell my 1,000 shares of the stock, I would have approximately …show more content…
Using this equation, if I were to take $30,000 of that salary this year and invest it with an interest rate of 5% for ten years, I will have about $48,867 at the end of ten years, whereas, if I wait four years, and then invest $30,000, I will only have $40,203. That is a difference of $8,664, just in four years. Of course, this is just random numbers I am using for examples, and I have simplified for demonstration purposes, but my point remains the same: the sooner I start earning (and saving), the more money I will have for the future, to invest or do with as I choose.
II. Bonus versus Stock
Similarly, if the firm were to offer me either a $5,000 bonus today, or 100 shares of the company’s stock, which is valued currently at $50 per share, I would say that mathematically the best offer would be the $5,000 bonus. Not only will I have the money today (considering again the time value principal I discussed above), but again, what would happen if I were to take the shares and have the stocks