Multiple Choice
The interest rate is 10% and will remain so forever.You do not drink wine but are interested in buying some for investment purposes.Assume that there are no transactions costs or storage costs and that a certain bottle of wine will be worth $44 one year from now, $51 two years from now, and $55 three years from now.After that it turns to worthless vinegar.How much should you be willing to pay for a bottle? (Pick the closest answer.)
A) $40
B) $42.15
C) $47.15
D) $41.32
E) $49.30
Correct Answer:
Verified
Correct Answer:
Verified
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