Your firm has sold a fleet of 100 cars to a local firm at a discounted price of 20,000 each (a total of 2,000,000) due in six months. 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?
A) 2,039,608
B) 1,961,161
C) 1,960,495
D) This problem cannot be answered because we have an annual interest rate but only one-half year in time.
Question 2
Your parts supplier gives you one-quarter of a year to pay for parts ordered today, or offers you a discount if you pay cash at purchase.
You have just purchased 73,500 worth of parts from your supplier and the discount is at an annual rate of 8. How much will you pay for the parts if you pay today?
A) 73,500
B) 72,099
C) 68,056
D) 72,046
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