Analyze the San Jose Company's application for credit. What positive factors are present? What negative factors are present?

The Quigley Company sells and installs ski lifts. It has received an order from Alpine Ski Resort for a $2.3 million system. The production and installation costs of this system amount to 69.6 percent of the total selling price. Because Alpine wishes to go through a full season before paying for the system, it has asked for credit terms of 1 year. Qlugley estimates that there is an 80 percent probability that Alpine will pay in full and a 20 percent chance that it will go bankrupt and pay nothing at the end of the year. Alpine's hill will be filled with this installation, so there is no prospect for repeat orders. Quigley's opportunity cost of carrying the receivable at its stated value of $2.3 million is 15 percent per annum.