Exercise 5-6 (Algo) Present value; single amount (LO 5-3)

Ray and Rachel are considering the purchase of two deluxe kitchen ovens. The first store offers the two ovens for $1,800 with payment due today. The second store offers the two ovens for $2,000 due in one year.

Required:

1-a. Assuming an annual discount rate of 8%, calculate the present value.

1-b. From which store should Ray and Rachel buy their ovens?

Store 1
Store 2