Respuesta :
Answer:
The correct answer is option (A) $519,799.59.
Explanation:
According to the scenario, the given data are as follows:
Payment 1st year = $218,000
Payment 2nd year = $224,000
Payment 3rd year = $238,000
Rate of interest = 14.5%
So, We can calculate the amount Southern Tours willing to pay by using following formula:
We add the payment for 3 years by simple interest as:
= [tex]\frac{payment (1st year)}{1+r^{t1} }[/tex] +[tex]\frac{payment (2nd year)}{1+r^{t2} }[/tex] + [tex]\frac{payment (3rd year)}{1+r^{t3} }[/tex]
= [tex]\frac{218,000}{1+0.145 }[/tex] + [tex]\frac{224,000}{(1+0.145)^{2} }[/tex] + [tex]\frac{238,000}{(1+0.145)^{3} }[/tex]
= $519,799.59
Hence, the amount Southern Tours willing to pay is $519,799.59.
