Math

Richard Simons is selling his house. He has a choice of taking $125,000 today or $135,000 in 6 months. If he takes the money today, he can invest it at Valley Bank at 5% interest compounded monthly.

a) How much would be in the account after six month if he took the $125,000.

b) Which option should he take?

c) How much more money does he gain in making this choice?

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  1. 125,000 invested for 6 months
    = 125000(1.025 = $128,125

    So what do you think?

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  2. didn't see the "monthly" part

    rate = .05/12 = .0041666...
    amount = 125000(1.00416666...)^6 = $128,157.73

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