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Maxwell Corporation has a customer who wants to purchase $50,000 of goods on credit. Maxwell estimates that the customer has a 97% probability of paying
Maxwell Corporation has a customer who wants to purchase $50,000 of goods on credit. Maxwell estimates that the customer has a 97% probability of paying the $50,000 in 4 months and a 3% probability of a complete default (paying no cash at all). Assume an investment of 85% of the amount, made at the time of the sale, and a required return of 10% APY. What is the NPV of granting credit?
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about $4,483.37
about $4,580.00
about $4,464.00
about $4,500.37
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