# 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?

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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

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