Gilbert Has Received Two Offers for His Business

Gilbert has received two offers for his business. The first offer is for $200,000 now and $40,000 payments per year over the course of 5 years. The second offer is for $200,000 now and $50,000 payments per year for four years. If interest is 4.8% compounded quarterly, determine whether the first or second offer should be accepted, and by how much.

A) Second offer by $6,790
B) Second offer by $5,995
C) Second offer by $4,042
D) First offer by $4,042
E) First offer by $5,995

Correct Answer:

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