A vintner is deciding when to release a vintage of Sauvignon Blanc. If it is bottled and released now, the wine will be worth $2.4 million. If it is barrel aged for a further year, it will be worth 10% more, though there will be additional costs of $360,000 incurred at the end of the year. If the interest rate is 7%, what is the difference in the benefit the vintner will realize if he releases the wine after barrel aging it for one year or if he releases the wine now? O He will earn $216,000 more if he releases the wine now. O He will earn $269,159 less if he releases the wine now. O He will earn $1,200,000 less if he releases the wine now. O He will earn $269,159 more if he releases the wine now.

A vintner is deciding when to release a vintage of Sauvignon Blanc. If it is bottled and released now, the wine will be worth $2.4 million. If it is barrel aged for a further year, it will be worth 10% more, though there will be additional costs of $360,000 incurred at the end of the year. If the interest rate is 7%, what is the difference in the benefit the vintner will realize if he releases the wine after barrel aging it for one year or if he releases the wine now? O He will earn $216,000 more if he releases the wine now. O He will earn $269,159 less if he releases the wine now. O He will earn $1,200,000 less if he releases the wine now. O He will earn $269,159 more if he releases the wine now.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A vintner is deciding when to release a vintage of Sauvignon Blanc. If it is bottled and released now, the wine will be worth $2.4 million. If it is barrel aged for a further
year, it will be worth 10% more, though there will be additional costs of $360,000 incurred at the end of the year. If the interest rate is 7%, what is the difference in
the benefit the vintner will realize if he releases the wine after barrel aging it for one year or if he releases the wine now?
O He will earn $216,000 more if he releases the wine now.
He will earn $269.159 less if he releases the wine now.
O He will earn $1,200,000 less if he releases the wine now.
O He will earn $269.159 more if he releases the wine now.

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