Mike bought a new hot tub today from Situation Hot Tubs.What is the present value of thecash flows associated with this transaction if the discount rate is 7.2 percent, he will receive arebate of $500 from Situation Hot Tubs in 1 year, and he will pay $3,200 to Situation Hot Tubs in4 years?
Note: the correct answer is less than zero.
A. -$1,956.68 (plus or minus $10)
B. -$2,889.52 (plus or minus $10)
C. -$2,044.49 (plus or minus $10)
D. -$1,923.10 (plus or minus $10)
E. None of the above is within $10 of the correct