The maker of a motion-sensing towel dispenser is considering adding new products to enhance offerings in the area of touchless technology. If the company does not expand its product line now, it will definitely do so in 2 years. Assume the interest rate is 10% per year. The amount the company can afford to spend now if the cost 2 years from now is estimated to be $100,000 is closest to:

Question

(a) $75,130
(b) $82,640
(c) $91,000
(d) $93,280

Answer 1

P = 100,000(P/F,10%,2)
= $100,000(0.8264)
= $82,640

(b) $82,640