hw 1 q 3

Your computer manufacturing firm must purchase

12 comma 00012,000

keyboards from a supplier. One supplier demands a payment of

$ $144,000

today plus

$ 12

per keyboard payable in one year. Another supplier will charge

$ 25

per keyboard, also payable in one year. The risk-free interest rate is

7 %7%.

a. What is the difference in their offers in terms of dollars today? Which offer should your firm take?

b. Suppose your firm does not want to spend cash today. How can it take the first offer and not spend

$ 144 comma 000$144,000

of its own cash today?

a. What is the difference in their offers in terms of dollars today?

The difference in their offers in terms of dollars today is

$

(Round to the nearest dollar.)