Question
You can make a one-time sale if you will grant a new customer 30 days to pay. This customer wants to purchase an item with
You can make a one-time sale if you will grant a new customer 30 days to pay. This customer wants to purchase an item with a sales price of $499 and a variable cost of $287. You estimate the probability of default at 33 percent. The monthly interest rate is 0.98 percent. Should you grant credit to this customer? Why or why not?
A) Yes; because the NPV of the potential sale is $33.05 B) Yes; because the NPV of the potential sale is $44.09 C) Yes; because the NPV of the potential sale is $13.02 D) No; because the NPV of the potential sale is $13.05 E) No; because the NPV of the potential sale is $2.65
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