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.
Answer: B
Explanation: B) PV = = = $1,961,161.35
MODE = END
INPUT .5 4 ? 0 -2,000,000
KEY N I/Y PV PMT FV
CPT 1,961,161.35
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