Answer:
$-573.54
Explanation:
Present value is the sum of discounted cash flows.
Present value can be found using a financial calculator.
For the first supplier
Cash flow in year zero = 0
Cash flow in year 1 = $80 x 600 = $48,000
I = 8.1%
Present value = $44,403.33
For the second supplier,
Cash flow in year zero = $20,000
Cash flow in year one = $45 × 600 = $27,000
I = 8.1%
Present value =$44,976.87
Difference = $44,403.33 -44,976.87 = $-573.54
To find the PV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
