F. Extension of credit For a single order The firm is considering a proposal to extend credit to a new customer Select values for the following: a. the amount of the order ($100,000) b. the contribution margin on the order (10%) (fixed costs are not affected by the order) c. probability of payment (90%) d. required return on the proposed transaction (20%) Assume the company will incur one half the costs associated with the order at the time it accepts the order, and the other half at the time of delivery, 30 days later. Payment is due 30 days after delivery. 1. What are the expected cash in and outflows from this order? 2. What is the expected net present value of this order? 3. Will the company accept this order? For possible second order The firm expects that if the customer from above makes payment on the initial order, there is a chance it will submit another order. The firm expects the second order to be twice the size of the initial order, and that it will be placed on the date of payment for the first order. If a second order is placed, the firm will incur half of the costs on the day the order is placed and the other half at the time of delivery, 30 days later. Payment on the second order will be due 30 days after delivery. Select values for the following a. the probability of an additional order if the customer makes payment on the initial order (90%) b. the contribution margin on the second order (5% greater than the contribution margin on the first order) c. the probability of payment on the second order (95%) 4. If a second order is placed, what are the expected cash outflows and when will they occur? 5. If a second order is placed, what is the net present value of the order? 6. What is the total probability that a second order will be placed? 7. What is the total net present value of the two orders 8. Will the company accept the first order? Explain