Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The fir

Question

Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The first store offers the two ovens for $2,600 with payment due today. The second store offers the two ovens for $2,800 due in one year.

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.)

Present value

Store 1:

Store 2:

1-b. From which store should Ray and Rachel buy their ovens?

Explanation / Answer

1-a) PV Store 1 2,600 Store 2 2568.80 (2800*.91743) 1b) store 2

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