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You are deciding whether to grant a customer credit for an order just received. The company's credit terms are net 60 days. The opportunity cost
You are deciding whether to grant a customer credit for an order just received. The company's credit terms are net 60 days. The opportunity cost of funds is 15%. The order dollar amount is $50,000. Knowing that your variable costs are 70% of sales and that credit administration and collection expenses are 2%.
Using the NPV approach, should you approve the order?
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