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.How much would the 125,000 be worth in six months if invested?Which offer should he take? Why? How much more money does he gain in
making this choice?

  1. 👍 0
  2. 👎 0
  3. 👁 261
  1. value of 125000 6 months from now
    = 125000(1.00416666...)^6
    = 128157.73

    Pr value of 135000
    x(1.00416666..)^6 = 135000
    x = 131673.68

    So both solutions show that he should take the 135000 six months from now.

    At he present time, the difference is worth
    = 131673.68 - 125000
    $ 6673.68

    Six months from now the difference is worth
    135000 - 128157.73 =6842.27

    notice that
    6673.68(1.00416666..)^6 = 6842.27

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. Math

    Multiple Choice Choose the best answer. For questions 1–3, rewrite the expression using exponents. 4 × 4 × 4 × 4 × 4 A. 54 B. (My choice) 45 C. 44 ====== 3 × 3 × 3 × 3 A. (My choice) 34 B. 43 C. 35 ===== 10 × 10 × 10 A.

  2. math

    In old gangster movies on TV, you often hear of "number runners" or the "numbers racket." This numbers game, which is still played today, involves betting $1 on the last three digits of the number of stocks sold on a particular

  3. statistics

    Richard has been given a 5-question multiple-choice quiz in his history class. Each question has three answers, of which only one is correct. Since Richard has not attended the class recently, he doesn't know any of the answers.

  4. Algebra

    John is thinking about buying a house for $179,000. The table below shows the projected value of two different houses for three years. Number of years 1 2 3 House 1 (value in dollars) 186,160 193,606.40 201,350.66 House 2 (value

  1. Accounting

    If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)? Answer 3,425 units 2,381 units 2,000 units 4,808 units

  2. math

    What is the additive inverse of 125,000 ? A) -125,000 B) 125,000 C) - 1 125,000 D) 1 125,000 16) Emma is thinking of subscribing to an e-magazine. The subscription price for one year is $5 per month, which will be withdrawn from

  3. math

    How much must be deposited today into the following account in order to have $ 25,000 in 8 years for a down payment on a​ house? Assume no additional deposits are made. An account with annual compounding and an APR of 5​%

  4. Statistics

    Richard has been given a 5-question multiple-choice quiz in his history class. Each question has four answers, of which only one is correct. Since Richard has not attended the class recently, he does not know any of the answers.

  1. Physics

    Richard is driving home to visit his parents. 125 of the trip are on the interstate highway where the speed limit is 65 . Normally Richard drives at the speed limit, but today he is running late and decides to take his chances by

  2. Algebra

    The selling prices of houses in a city during one year were normally ditributed with a mean of $259,000 and a standard deviation of $15,000. Which of the following is closest to the percentage of the homes that had a selling Price

  3. FINANCE

    Your uncle offers you a choice of $30,000 in 50 years or $95 today. If money is discounted at 12 percent, which should you choose?

  4. economics

    Review: Full, Anonymous: No Week 3 Homework Please answer the following questions: 1. The following information describes the value Lori Landlord places on having her five apartment houses repainted. She values the repainting of

You can view more similar questions or ask a new question.