Gerald Electric Company Will Only Sell a Piece of Switching

Multiple Choice

Gerald Electric Company will only sell a piece of switching equipment on credit if the customer puts $10,000 down. The balance of $40,000 can be paid at the end of 12 months. What amount should Gerald Electric be willing to accept today if the customer is willing to make the entire payment immediately. The company's credit terms are 14% per year compounded annually.

A) $3,508
B) $34,782
C) $35,088
D) $43,859
E) $45,088