Memphis Metro just made a $75,000 purchase from a supplier, subject to the extension of suit-able trade credit terms. Using a discount rate of 7%, calculate the present value of this cash outflow assuming trade credit terms ofa. 30 daysb. 45 daysc. 60 daysd. 90 days

The Calculation of the Present Value of this cash outflow assuming trade credit terms of a. 30 days b. 45 days c. 60 days d. 90 days would be the following:

a. 30 days is $74,625

b. 45 days is $74,325

c. 60 days is $74,100

d. 90 days is $73,725

Explanation:

The Calculation of the Present Value of this cash outflow assuming trade credit terms of a. 30 days b. 45 days c. 60 days d. 90 days would be the following:

a. 30Days

Present Value = Future Value / (1+r) ^n

$75,000 / (1.07) ^30/365

$75,000*.995

Present Value = $74,625

b. 45 Days

Present Value = Future Value / (1+r) ^n

$75,000 / (1.07) ^45/365

75,000*.991

Present Value = $74,325

c. 60Days

Present Value = Future Value / (1+r) ^n

$75,000 / (1.07) ^60/365

$75,000*.988

Present Value = $74,100

d. 90 Days

Present Value = Future Value / (1+r) ^n

$75,000 / (1.07) ^90/365

$75,000*.983

Present Value = $73,725