1. Ida just bought a painting at an auction for $60,520. She was not a fan of the art itself, but figured it would appreciate, as the artist was gaining increasing publicity. She was bidding against Harry, who seemed distraught and disappointed. Harry approached her after the auction and made an offer to Ida. I had to stop bidding because I did not have enough cash today, Harry said. But he continued, Id like to execute a contract to buy the painting back from you in two and a half (2.5) years for $75,000.

   Ida knew that, if she had not used her money to buy the painting, she could instead have invested it that same day. What annual rate would she have to receive if she invested her cash to get the same return as the deal with Harry? To put the same question in different terms, what discount rate would Ida have to use to be indifferent between (i) signing the contract with Harry and (ii) not signing it and investing it instead?

   	A.	0.75%
   	B.	0.78%
   	C.	4.48%
   	D.	8.96%
   	E.	9.34%