14. Credit Decision. Look back at Example 20.3. Cast Iron's costs have increased from $1,000 to $1,050.

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14. Credit Decision. Look back at Example 20.3. Cast Iron's costs have increased from $1,000 to $1,050. Assuming that there is no possibility of repeat orders, and that the probability of suc- cessful collection from the customer is p = .95, answer the following: (LO4)

a. Should Cast Iron grant or refuse credit?

b. What is the break-even probability of collection?

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Fundamentals Of Corporate Finance

ISBN: 9780073382302

6th Edition

Authors: Richard A Brealey, Stewart C Myers, Alan J Marcus

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