Your firm has sold a fleet of 50 cars to a local firm at a discounted price of $23,000 each (a total of $1,150,000)due in six months.You are willing to discount the purchase price at an annual rate of 3% if the firm pays cash today.What is the least amount of money you will accept if the firm pays your company today?
A)$1,150,000
B)$1,133,129
C)$1,125,495
D)This problem cannot be answered because we have an annual interest rate but only one-half year in time.

Question

Quizplus · Accepted Answer

To calculate the discounted value of the fleet if the firm pays cash today, we need to use the formula:
Discounted value = Face value / (1 + r)^t 
where r is the annual discount rate and t is the time in years.

Here, the face value is $1,150,000, the annual discount rate is 3%, and the time is six months or 0.5 years.

Plugging in the values, we get: 
Discounted value = $1,150,000 / (1 + 0.03)^0.5
= $1,133,129

Therefore, the least amount of money the firm will accept if the company pays today is $1,133,129 (option B).

Your Firm Has Sold a Fleet of 50 Cars to a Local