Time value of money and interest rates
Course:- Finance Basics
Reference No.:- EM1327389

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Finance Basics

Company A purchases obsolete inventory and re-sells it on-line. Company A learns that Company B is selling some obsolete inventory for $100,000. Company A wants to purchase the inventory immediately, but cannot pay afford the $100,000 price tag until one of its other investments matures and becomes available in two years. In exchange for obtaining the obsolete inventory now, Company A offers to pay Company B $121,000 in two years.

Assuming interest rates remain at 10% over the next two years, should Company B accept Company As offer?

Why or why not? Explain.

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
Describe the organization, what it does, the customers it serves, and its size. Research the organization's mission statement. Discuss the role HR will play (or does play) in
Osbourne Corporation has bonds on the market with 16.0 years to maturity, a YTM of 10.5 percent, and a current price of $943. The bonds make semiannual payments. What must t
Suppose a hospital was offered a capitation rate for a covered population of $40 per member per month (PMPM). Briefly explain how targeting costing would be applied to this
Estimate a beta coefficient for Kinectica. Adjust for leverage differences between the single product companies and Kinectica. Assume the corporate tax rate is 0% and the de
A firm has a profit margin of 2.5% and an equity multiplier of 1.5. Its sales are $440 million, and it has total assets of $220 million. What is its ROE? Round your answer t
Think about a team you know well. It could be a volunteer organization, a small group at work, or a sports team. If you were introducing a new idea-one that team members mig
Suppose you are a project manager in the marketing department for a county funded hospital. The hospital is launching an extensive public service program for cardiac health.
Should the United States use trade restrictions as a means of encouraging improvements in human rights in some countries? If so, how will this affect U.S. firms that are con