A vintner is deciding whe

A vintner is deciding whe

A vintner is deciding when to release a vintage of pinot gris. If it is bottled and released now, the wine will be worth $2.2 million. If it is barrel aged for a further year, it will be worth 20% more, though there will be additional costs of $500,000. If the interest rate is 7%, what is the difference in the benefit the vintner will realise if he releases the wine after barrel aging it for one year, or if he releases the wine now?

%d bloggers like this: