How do I decide on who to hire?

Question

I have two guys. One will need to be paid 150000 a month for the next 4 years. In return, he will bring in175000 every month. The other guy will be paid 100000 and for the first year, he will bring in no money to the company but will make 120000 for the remaining 3 years. How do I decide who to hire

Answer 1

Hire the first guy, by bringing in 175000 a month it'll be worth paying him 150000 a month

Answer 2

Homework problem?

Answer 3

Present value of first guy profit = PV(5%, 48, -25000, 0, 0) = ?

5% is an arbitrary yield rate, 48 is number of months, 25,000 is the monthly profit. Use excel to solve the function

Present value of second guy profit = -100,000 + 120,000*[(1/5%)^24 + (1/5%)^36 + (1/5%)^48] = ??

You compare both numbers and pick the one with the highest present value.

But the decision is quite obvious:

Sum of profit from guy 1 = (175-150)*48 = $1.2 M

Sum of profit from guy 2 = 120*3 - 100 = $260,000

Are you sure you plugged the correct numbers, or did I misunderstood some part?