Question
You work for Clean Inc. At your cost price you have $1,000,000 CAD worth of toilet paper sitting in the warehouse. There are two international
You work for Clean Inc. At your cost price you have $1,000,000 CAD worth of toilet paper sitting in the warehouse. There are two international customers that you could sell it to. Both demand net 30 days terms but they will pay the freight and customs costs. The risk of accounts receivable default for the two countries is very different. For the country of Simonistan the rate is Simonistan Default Rate %, and for the country of Janeland the rate is Janeland Default Rate %. Accounts receivable insurance on the order will cost you Risk Premium % of the default rate. (E.g. If the invoice is for $1,000 CAD, the default rate is 10% and the Risk Premium % is 30% you would have to pay 30% of 10% of $1,000 as the premium. So, $30 CAD to insure your accounts receivable against non-payment by the customer.) However, the profit margin on the two sales is also rather different. Which customer should you sell to make the most profit? Use the data on the spreadsheet to make your calculations. Note: provide all answers to two (2) decimal places
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