A cash-strapped young professional offers to buy your car with four,equal annual payments of $3,000,beginning 2 years from today.Assuming you're indifferent to cash versus credit,that you can invest at 10%,and that you want to receive $9,000 for the car,should you accept?

Question

Quizplus · Accepted Answer

The present value of the four payments of $3,000 each, discounted at 10%, is $8,645, which is less than the $9,000 you want to receive for the car.

A Cash-Strapped Young Professional Offers to Buy Your Car with Four,equal