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You buy a refrigerator for $800 but you don't have to make the payment until next year (that is, one year later). The opportunity cost
You buy a refrigerator for $800 but you don't have to make the payment until next year (that is, one year later). The opportunity cost of money is 3%. What price are you paying for the refrigerator in present dollars? You can defer payment on the refrigerator for an additional year. If interest rates were 20% and you can pay for the refrigerator in two years, what is the equivalent current price?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
