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Charlatan Corp. is considering a new customer for a piece of capital equipment that is sold for $110,000 per unit. The variable cost to manufacture
Charlatan Corp. is considering a new customer for a piece of capital equipment that is sold for $110,000 per unit. The variable cost to manufacture the equipment is $76,000 per unit. Credit is extended for one month, and the required return is 1% per month. Historically, payment is never received for about 1 out of 100 orders. " "a) Find the NPV of the order. If this is a one-time order, should it be filled? What is the break-even probability of default? " "b) Assume if the customer makes payment, they will likely become a reliable repeat customer. Find the NPV of the order. Should the order be filled? What
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