A manufacturer of off-road vehicles is considering the purchase of dual -axis in

Question

A manufacturer of off-road vehicles is considering the purchase of dual -axis inclinometers for instalation in a new line of tractors. The distributor of the inclinometers is temporarily overstocked and is offering them at a 40% discount from the regular cost of $142. if the purchaser gets them now instead of 2 years from now, which is when they will be needed, what is the present worth of the savings per unit? The company would pay the regular price, if purchased in 2 years. Assume the interest rate is 10% per year.

Explanation / Answer

discount on each unit = 56.8
so PV of each unit = 56.8(1+0.1)-2

=46.94 (ans)

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