Mike Macaro is selling a piece of land. Two offers are on the table. Morton Comp
ID: 2642275 • Letter: M
Question
Mike Macaro is selling a piece of land. Two offers are on the table. Morton Company offered a $40,000 down payment and $35,000 a year for the next 5 years. Flynn Company offered $25,000 down and $38,000 a year for the next 5 years. Assume money can be invested at 8% compounded annually. (Use Table13.2.)
What is the value of the offers? (Do not round intermediate calculations. Round your answers to the nearest cent.)
a.What is the value of the offers? (Do not round intermediate calculations. Round your answers to the nearest cent.)
Explanation / Answer
the value of Morton offer is= $40,000+ (35,000)X (1.08)5
= 40,000+ 51,415= 91,415
the value of Flynn offer is= 25,000+ 38,000(1.08)5
= 25000+ 55,822= $80,822
offer from Morton is better.