Calculate the npv of decision to grant credit

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Reference no: EM132003002

Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 115 units have been made by customers requesting credit. The variable cost is $8,800 per unit, and the credit price is $10,750 each. Credit is extended for one period. The required return is 1.4 percent per period. If Solar Engines extends credit, it expects that 35 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers will be one-time orders.

Calculate the NPV of the decision to grant credit. (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV $

Reference no: EM132003002

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