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Jesse Gonzalez is evaluating a proposal to extend credit to a group of new customers. The new customers will generate an average of $45,000 per
Jesse Gonzalez is evaluating a proposal to extend credit to a group of new customers. The new customers will generate an average of $45,000 per day in new sales. On average, they will pay in 70 days. The variable cost ratio is 80%, collection expenses are 2% of sales, and the cost of capital is 13%. What is the NPV of one day's sales if Jesse grants credit? Assume that there is no bad debt loss.
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