Avintner is deciding when to release a vintage of sauvignon blanc. if it is bottled and released now, the wine will be worth $ 2.6 million. if it is barrel aged for a further year, it will be worth 15% more, though there will be additional costs of $ 546 comma 000 incurred at the end of the year. if the interest rate is 7%, what is the present value of 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?

Sauer food company has decided to buy a new computer system with an expected life of three years. the cost is $440,000. the company can borrow $440,000 for three years at 14 percent annual interest or for one year at 12 percent annual interest. assume interest is paid in full at the end of each year. a. how much would sauer food company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 12 percent rate? compare this to the 14 percent three-year loan.