1. A delivery service is buying 600 tires for its fleet of vehicles. One supplier offers to supply the tires for $85 per tire, payable in one year. Another supplier will supply the tires for $20,000 down today, then $50 per tire, payable in one year. What is the difference in PV between the first and the second offer, assuming interest rates are 8.5%
2. XYZ corporation has projected free cash flow of $80,000 and $100,000 for the next two years, respectively. After the second year FCF is expected to grow at a constant rate of 5%. The company’s weighted average cost of capital is 9%. What is its terminal, or horizon value and what is the value of operations?