Calculate the NPV of credit decision

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Reference no: EM131923725

Crisps has received an order for 13500 bags of potato chips from BigBag. Crisps views BigBag to be a long-term customer and believes they will continue to place the same order year after year forever. Crisps sells its large bags of potato chips for $1.95 each, and calculates its internal cost for the product at $0.75 each.

Market research estimates that there is a 30% chance that BigBag will pay in full what it owes. Crisps uses a discount rate of 6.25% for all NPV analysis.

Based on this information, calculate the NPV of this credit decision?

$

Place your answer to the nearest dollar. Do not use a Dollar sign or commas within your answer.

Reference no: EM131923725

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