Problem:
Richard Simons is selling his house. He has a choice of taking $125,000 today or $135,000 in 6 months. If he takes the money today, he can invest it at Valley Bank at 5% interest compounded monthly.
Required:
Question 1: How much would the 125,000 be worth in six months if invested?
Question 2: Which offer should he take? Why? How much more money does he gain in making this choice?
Note: Show supporting computations in good form.