Two people wish to buy your house. The first person offers you $200,000 today, while the second person offers you twenty five annual payments of $15,000.
Assume a 5 percent interest or discount rate.
(a) What is the present value of each offer?
(b) If you could take either offer, which person would you sell your house to? [5 Points] (c) Kendra wants to be able to make withdrawals of $60,000 a year for 30 years after retiring in 35 years. How much will she have to save each year up until retirement if her account earns 7% interest?