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Zion Inc. assumes new customers will default 20 percent of the time but if they don't default, they will become repeat customers who always pay
Zion Inc. assumes new customers will default 20 percent of the time but if they don't default, they will become repeat customers who always pay their bills. Assume the average sale is $450 with a variable cost of $260, and a monthly required return of 1.85 percent. What is the NPV of extending credit for one month to a new customer? Assume 30 days per month.
A ) $7,956
B) $19,199
C) -$111
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