Hi there,

If you could help me out here I would really appreciate it. My friend
and I are playing a board game and this is one of the questions and I
can’t figure it out. Unfortunately I don’t have any more details of
the question other then what I have written. I assume “rent” means
interest.

Thanks for your help,
Venai

“Sharon wants to sell her business. One of the offers is $50,000 cash
now plus $20,000 in two years and an additional $40,000 in four years
from now. If money rents for 16% per annum compounded monthly, A) what
is the offer worth 6 months from now, and B) if another offer is made
on the business for $120,000 two years from now show which offer is
best today and by how much.”

Venai –

That's some board game you're playing!

16% per year, compounded monthly, produces an annual interest rate of
17.2%.  So, a payment of $20,000 in two years has a present value of
$14,560 ($120,000 has a present value of $87,363).

Offer 1's P.V. is $50,000 + 14,560 + 21,201 = $85,761

Offer 2's P.V. is $87,363

In 6 months, each of the present values will have appreciated by 8.3%.
 Offer 1 will be worth $92,879 and Offer 2 will be worth $94,614.

Best regards,

Omnivorous-GA