Your firm needs to purchase 8,000 safety vests from a supplier. One supplier demands a payment of $32,000 today plus $5.00 per vest payable in one year. Another supplier will charge $9.50 per vest, also payable in one year. If the discount rate is 7.10% per year, compounded annually, how much does your firm save by taking the less expensive offer compared to the more expensive offer
Your firm needs to purchase 8,000 safety vests from a supplier. One supplier demands a payment of $32,000 today plus $5.00 per vest payable in one year. Another supplier will charge $9.50 per vest, also payable in one year. If the discount rate is 7.10% per year, compounded annually, how much does your firm save by taking the less expensive offer compared to the more expensive offer
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Your firm needs to purchase 8,000 safety vests from a supplier. One supplier demands a payment of $32,000 today plus $5.00 per vest payable in one year. Another supplier will charge $9.50 per vest, also payable in one year. If the discount rate is 7.10% per year, compounded annually, how much does your firm save by taking the less expensive offer compared to the more expensive offer
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I'm questioning how you calculated supplier 1. Wouldn't it be $32,000 + the PV of $40,000 ($5 * 8000 vests)? So I calculate $32,000 + $37,348.27 = $69,348.27 for supplier 1. I got the same answer for supplier 2. Could you please verify your answer?
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