Company should purchase the equipment now or wait year

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Reference no: EM131873535

The company you work for is looking to expand. As the CFO, you are tasked with comparing the cost of buying manufacturing equipment now, at a $250,000 discount from its original price of $1,650,000 and storing it for a year, or waiting one year to buy it. The cost of buying the equipment includes the supplier’s bill and the cost to store the item for a total of $1,464,000. What interest rate is implied by a $1,464,000 cash flow today, versus $1,650,000 in a year? When it comes to obtaining the cash for the purchase of the equipment, what is your recommendation on whether the company should purchase the equipment now or wait a year?

Reference no: EM131873535

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