SOLUTION: Mr. Jones is selling his boat for $6,870. He has received two offers: one buyer agrees to pay the asking price today and the other will pay $7,200 in a year’s time. a) Which off

Question 1200543: Mr. Jones is selling his boat for $6,870. He has received two offers: one buyer agrees to pay the asking price today and the other will pay $7,200 in a year’s time.
a) Which offer is better for Mr. Jones if he invests the $6,870 for one year at 4 %?
b) By how much?
Just need a brief breakdown on this question. I don't understand how they got that answer
Answer by ankor@dixie-net.com(22740) (Show Source): You can put this solution on YOUR website!
Mr. Jones is selling his boat for $6,870.
He has received two offers: one buyer agrees to pay the asking price today and the other will pay $7,200 in a year’s time.
a) Which offer is better for Mr. Jones if he invests the $6,870 for one year at 4 %?
:
Find how much $6879 will be worth in 1 year's time at 4%
1.04*6879 = $7144.80, not quite $7200
:
b) By how much?
7200 - 7144.80 = $55.20
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