Drilling machine

A manufacturing firm purchased a heavy duty drilling machine. They were given two payment options:
Option 1: Make a payment of $46,000 immediately to settle the invoice for the machine.
Option 2: Make a payment of $21,500 immediately and the balance of $23,550 in 3 months to settle the invoice.
If money is worth 4.12% compounded quarterly, answer the following:
What is the total present value of Option 2?

Correct answer:

a =  45935.8 USD

Step-by-step explanation:

q=4.12%=1+4.12100=1.0412  a=21500 q+23550=21500 1.0412+23550=2296795=45935.8=2296795 USD=45935.8 USD a<46000



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Showing 1 comment:
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Dr Math
From our user:

Hi Peter,

Thank you for your time, I have checked your answer and it is still showing as wrong.

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