Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The fir
ID: 2415945 • Letter: R
Question
Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The first store offers the two ovens for $3,500 with payment due today. The second store offers the two ovens for $3,700 due in one year.
Assuming an annual discount rate of 9%, calculate the present value. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.)
Required: 1-a.Assuming an annual discount rate of 9%, calculate the present value. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to 2 decimal places.)
Explanation / Answer
The first store offers the two ovens for=$3,500
The second store offers the two ovens for= $3,700 due in one year.
Pv value=$3,700/1.09=$3,394.495
so Ray and Rachel can chooze the second store because it takes lower cash outfows.
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