Question
Maxwell Corporation has a customer who wants to purchase $60,000 of goods on credit. Maxwell estimates that the customer has a 97% probability of paying
Maxwell Corporation has a customer who wants to purchase $60,000 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 of the sale and a required return of 10% APY. What is the NPV of granting credit?
Group of answer choices
about $4,483.37
about $5,380.05
about $5,829.63
about $45,938.17
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Handbook Of Research In Education Finance And Policy
Authors: Helen F. Ladd, Margaret E. Goertz
2nd Edition
0415838010, 978-0415838016
