Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The first store offers the

Question:

Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The first store offers the two ovens for $3,500 with payment due today. The second store offers the two ovens for $3,700 due in one year.

Required:
Assuming an annual of 9%, from which store should Ray and Rachel buy their ovens?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...