You work in the accounting department of a major flat-screen television manufacturer. Demand for your product is very high. These televisions sell for $2,000 each. An offer has arrived on your desk from a major retailer to buy 100,000 televisions with 10 equal annual payments of $22 million starting immediately. The current interest rate is 5%.
Required:
What is the present value of the order? Do you advise your employer to accept or to reject it?