A Vintner Is Deciding When to Release a Vintage of Sauvignon

question 61

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.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 $60,000 less 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.

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Definitions:

Classes

Categories or groups into which data can be divided based on certain characteristics or attributes.

Relative Frequencies

The measures showing the number of times a certain event occurs in relation to the total number of events, often expressed as a percentage or fraction.

Sample Size

The number of observations or entities included in a sample, which represents a portion of the total population.

Cumulative Frequency

The running total of frequencies up to a certain point in a set of data.