A Vintner Is Deciding When to Release a Vintage of Sauvignon

question 107

Multiple Choice

A vintner is deciding when to release a vintage of sauvignon blanc.If it is bottled and released now,the wine will be worth $2.2 million.If it is barrel aged for a further year,it will be worth 20% more,though there will be additional costs of $500,000,realized at the end of the year.If the interest rate is 7%,what is the difference in the benefit the vintner will realize if he releases the wine after barrel aging it for one year or if he releases the wine now?

• A)He will earn $600,000 less if he releases the wine now.
• B)He will earn $200,000 more if he releases the wine now.
• C)He will earn $107,000 less if he releases the wine now.
• D)He will earn $80,000 more if he releases the wine now.
• E)He will earn $500,000 less if he releases the wine now.

---

Definitions:

Automobile Production

The manufacturing process of cars, involving assembly lines and complex supply chains, significant for its economic impact.

Farm Mechanization

The process of using agricultural machinery and equipment to increase the efficiency of farming operations and productivity.

Disk Plow

An agricultural tool featuring a disk-shaped blade used for plowing to turn over the soil, particularly useful in tough or sticky soil conditions unlike traditional plows.

Fordlandia

A failed industrial town established by American industrialist Henry Ford in the Brazilian Amazon in the 1920s, intended to secure a source of cultivated rubber for his automobile manufacturing.