Your firm has sold a fleet of 100 cars to a local firm at a discounted...
| Your firm has sold a fleet of 100 cars to a local firm at a discounted price of $40,000 each (a total of $4,000,000) due in one year. You are willing to discount the purchase price at an annual rate of 4% if the firm pays cash today. What is the least amount of money you will accept if the firm pays your company today? |
Homework Answers
Here the price given is 104% to find the minimum cash the firm has to pay we need to find 100% price it is easily done by simple method. Or say in simple words here the future value is given you just need to convert it into present value.
Present value= future value/(1+r)n
where, r = annual rate
n = no. Of years
Present value = 4000000/1.04
= 3846153.84615
i hope my efforts will be fruitful to you ....?
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