Reference no: EM133272641
Question 1.
Sam just won some valuable sculptures in a contest. He wants to sell them and has received two comparable offers. Buyer 1 is offering $50,000, but wants Sam to keep the sculptures for 3 years before the buyer can pay him for them. Buyer 2 is offering $35,000 to buy the sculptures today. If Sam takes Buyer 2's offer, he can invest the money in an account that earns 9.5%, compounding monthly. Based on this 9.5% compounding discount rate, what is the present value of Buyer 1's offer? Which offer should Daniel take?
A. $46,489.47. Take offer 1.
B. $66,413.53. Take offer 1.
C. $37,642.93. Take offer 1.
D. $37,758.64. Take offer 1.
Question 2.
Bruce has a certificate of deposit that will be worth $17,250 at maturity. The market rate for CD's like this is 8.5% with monthly compounding. If the CD is meant to mature 14 years after purchase, what was the price Bruce paid for the CD?
A. $5,505.20
B. $5,269.88
C. $1,232.14
D. $5,313.65
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