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Sliver Beaver Transmission Company enters into a contract with a major U.S. auto manufacturer to design and produce four-speed transmissions for small SUVs. Under
Sliver Beaver Transmission Company enters into a contract with a major U.S. auto manufacturer to design and produce four-speed transmissions for small SUVs. Under the terms of the contract, Sliver Beaver will deliver the transmission immediately but the auto manufacturers will defer payment for six years, the end of the life of the base warranty. The contract price is $3,300,000 and the interest rate incurred on similar financing agreements in the industry is 11%.
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