Samantha has holdings of 250 troy ounces of platinum, currently valued at $820 dollars per ounce. She estimates that the price of platinum will rise to $869.20 per ounce in the next year. If the interest rate is 12%, should she sell the platinum today?
A) Yes, as the difference between the present value of selling now and selling in one year is $12,300 dollars today.
B) Yes, as the difference between the present value of selling now and selling in one year is $10,982 dollars today.
C) Yes, as the difference between the present value of selling now and selling in one year is $9840 dollars today.
D) No, as the difference between the present value of selling now and selling in one year is -$8786 dollars today.

Question

Quizplus · Accepted Answer

B) $820 × 250 = $205,000;
$869.20 × 250 = $217,300; $217,300/1.12 = $194,018
$205,000 - $194,018 = $10,982

Samantha Has Holdings of 250 Troy Ounces of Platinum, Currently