Q1

Q2

You have the opportunity to make a one-time sale if you will give a new customer 30 days to pay. You suspect there is a 15 percent chance this person will never pay you. The sales price of the item the customer wants to buy is $289. Your variable cost on that item is $156 and your monthly interest rate is 1.75 percent. Should you grant credit to this customer? Why or why not? yes; because the NPV of the potential sale is $113.05 yes; because the NPV of the potential sale is $85.43 no; because the NPV of the potential sale is -$133.00 no; because the NPV of the potential sale is -113.05 no; because the NPV of the potential sale is-$89.65