Calculate the NPV of this credit decision

Assignment Help Financial Management

Reference no: EM131948938

Crisps has received an order for 12000 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 $1.85 each, and calculates its internal cost for the product at $1.05 each.

Market research estimates that there is a 39% 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: EM131948938

Questions Cloud

Tightness of an oligopoly market : Concentration ratios have often been used to note the tightness of an oligopoly market.

Expected to be constant over the project life : Revenues and other operating costs are expected to be constant over the project's life. What is the project's NPV?

What is the frequency reuse distance for configuration : Telecommunication Modelling and Simulation - What is the frequency reuse distance for configuration and what basis did you make your choice

Create brief history of the two traditions : Create brief history of the two traditions and a comparison of their approach to Bible, art, specific symbols, and rituals, as well as core beliefs, and ethics.

Calculate the NPV of this credit decision : Market research estimates that there is a 39% chance that BigBag will pay in full what it owes. calculate the NPV of this credit decision?

Develop a comparative analysis between the three religions : Develop a comparative analysis between the three religions and draw upon the main similarities and differences that are evident from research.

What is the year three cash flow : Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 3 cash flow?

Quoted yield is before tax and credit risk adjustments : Because the quoted yield is before tax and credit risk adjustments, Ye is interested in determining which of these two bonds is best.

Expenditure on social assistance may not be viable : Expenditure on social assistance may not be viable in the longer term and derail fiscal policies in South Africa, if it is not managed carefully.

User Account

All Pages