Sagheer Received Two Offers for His Property That He Is

question 122

Multiple Choice

Sagheer received two offers for his property that he is selling. Offer 1 consists of $700 000 immediately and offer 2 consists of $500 000 now and $110,000 per annum for the next 2 years. If money earns 6% compounded semi-annually, which offer has a better economic advantage and by how much. Assume no inflation or discount?

• A) Offer 1 is better by ~$1600
• B) Offer 2 is better by ~$1600
• C) Offer 1 is better by ~$5100
• D) Offer 2 is better by ~$5100
• E) Offer 2 is better by ~$20 000

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Definitions:

Average Annual Revenue

This refers to the amount of money a company earns in a year, on average, from its operations.

Standard Deviation

A metric indicating the extent to which data points diverge from the mean, showing the distribution's spread.

Average Annual Revenue

The mean income generated by a business, entity, or asset within one fiscal year.

Random Sample

A group of people selected from a bigger group, with every person having the same probability of being chosen.