Q1

A customer just placed a $70 purchase order from your firm. To facilitate the sale, you must purchase $30 in inventory from a supplier. The invoice for the inventory is payable in 20 days. Assuming a discount rate of 3.65% and that the timing of the collection of cash from the customer is delayed by an operating cycle of 70 days, the net present value of the cash flows associated with this credit sale is closest to:

a)$38.48 b)$39.57 c)$40.00 d)69.51

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Q2

Use the following information to calculate net present value:

Upfront cash outflow = $30

Cash inflow in two years = $50

Discount rate = 10%

a)$11.32 b)$11.32 c)$15.45 d)$41.32