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Zozan Corp. manufactures Hydrogen engines automobiles. Recently 450 new orders placed by customers requesting credit. The variable cost is $25,000 per unit, and the credit
Zozan Corp. manufactures Hydrogen engines automobiles. Recently 450 new orders placed by customers requesting credit. The variable cost is $25,000 per unit, and the credit price is $32,000 each. Credit is extended for one period, and based on historical experience, payments for 40% of the orders are never collected. The required return is 3% per period. Assuming a repeat customer, should it be filled by the firm? The customer will not buy if credit is not extended. Answer this question by calculating the NPV.
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