Question

You have saved $1500 to buy a TV you notice the store is offering one year same as cash deal you can take the TV home today and pay nothing until one year from now when you’re out of the store $1500 purchase price if your savings account earns 5% a year what is the NPV of this offer

Answer 1

The net present value of 1,500 a year from now at 5% interest is $1,428.57.

Explanation:

NPV = 1,500 / 1.05 = 1,428.57