Calculate the npv of the decision to grant credit

Assignment Help Finance Basics

Reference no: EM132041477

Question: Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 160 units have been made by customers requesting credit. The variable cost is $10,600 per unit, and the credit price is $13,000 each. Credit is extended for one period. The required return is 1.4 percent per period and the probability of default is 10 percent. Assume the number of repeat customers is affected by the defaults. In other words, 25 percent of the customers who do not default are expected to be repeat customers.

Calculate the NPV of the decision to grant credit. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM132041477

Questions Cloud

Calculate the net present value of the product : Plato Pharmaceuticals Ltd. has invested $100,000 to date in developing a new type of insect repellent. The repellent is now ready for production and sale.

Systematic and unsystematic risk : Explain the difference between systematic and unsystematic risk.

Situations related diversification : What situations related diversification might be considered unfair competition?

Prepare for a promotion with new responsibilities : List two steps you would take to prepare for a promotion with new responsibilities.

Calculate the npv of the decision to grant credit : Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 160 units have been made by customers requesting

What are the types of airport beacons : What are the 3 types of airport beacons? What's the Visual Approach Slope Indicator light system?

How much money can you withdraw each month : You are planning to save for retirement over the next 25 years. To do this, you will invest $700 per month in a stock account and $300 per month.

Major aviation environmental impacts : What are examples of the three major aviation environmental impacts?

Functions and responsibilities of civil aeronautics board : What is the makeup, functions and responsibilities of the Civil Aeronautics Board.

User Account

All Pages