Ashley, from your workbook, has discovered another wine, wine D.Wine drinkers are willing to pay 45 dollars to drink it right now.The amount that wine drinkers are willing to pay will rise by 15 dollars each year that the wine ages.The interest rate is 10%.How much would Ashley be willing to pay for the wine if he buys it as an investment? (Pick the closest answer.)
A)76 dollars
B)45 dollars
C)150 dollars
D)495 dollars
E)71 dollars

Question

Quizplus · Accepted Answer

The future value of the wine increases by $15 each year, and the present value is calculated using the formula for present value of a growing annuity. The closest answer to the calculated present value is $76.

Ashley, from Your Workbook, Has Discovered Another Wine, Wine D