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Pods Inc. has been approached by a new customer who has asked the firm to extend credit for 30 days on a one-time purchase of
Pods Inc. has been approached by a new customer who has asked the firm to extend credit for 30 days on a one-time purchase of $600. The firm's required return on receivables is 1.5 percent per month and the variable cost of the desired item is $350. What is the NPV of granting credit if the firm estimates the probability of default is 25 percent? Assume 30 days per month.
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