A Furniture Store Offers No Money Down and No Payment

question 116

Multiple Choice

A furniture store offers no money down and no payment for two years.You decide to purchase a table,which you will take home today,and pay the $1,500 purchase price two years from now.If interest rates are 7%,what is the NPV of this offer?

• A)-$1500
• B)$189.84
• C)$98.13
• D)$0
• E)$217.35

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Definitions:

Seasonal Revenues

Income generated by a business that varies depending on the time of year, often due to consumer demand patterns.

Capital Leases

A capital lease is a lease considered to have the economic characteristics of asset ownership for accounting purposes.

Changes in Accounting Principles

Adjustments made to the accounting methodology used by a company, which could significantly affect the financial statements.

Inventory Loss

A decrease in the quantity or value of inventory due to factors like theft, spoilage, or obsolescence.