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Hard Investment Decision

Jimmy's Dilemma

#Recruiting
ProHub Comment

This case requires the candidate to apply DCF valuation methodology to compare two competing compensation packages, then extend the analysis beyond immediate financial incentives to consider long-term exit opportunities. The key insight is recognizing that exit opportunities create a significant additional value advantage for Firm B that outweighs Firm A's higher NPV over the initial 3-year period.

Estimated Time 15 minutes
Difficulty Hard
Source NYU
50 / 100
It is early October, and Jimmy Smith, an MBA2 at NYU Stern, has a decision to make. After a summer interning at Firm A, Jimmy received an offer to return full-time next year. However, Jimmy also decided to re-recruit and received a competing offer from Firm B. Jimmy now needs to decide which offer he should accept, and has looked to you, his best friend, for help.

Clarifying Information

  1. Jimmy only cares about money, and is seeking to maximize financial value
  2. Jimmy is not considering any other opportunities
  3. If asked: Jimmy’s intention is to work at either firm for 3 years
  4. Firms A and B are competitors in the same industry
  5. Firm A is considered second tier, but increasingly competes with top-tier firms for talent
  6. Firm B is the more prestigious and is considered top-tier in its industry