What interest rate is implied by a cash flow today

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The company you work for is looking to expand. As the CFO, you're 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 ear 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.

Question 1: What interest rate is implied by a $1,464,000 cash flow today, versus $1,650,000 in a year?

Question 2: 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: EM132506777

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