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?

Answer rating: 100% (QA)

To calculate the present value of the refrigerator in one year we can us... View the full answer