Minimum probability of payment on the repeat order

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Reference no: EM132032119

Cast Iron Company, on each nondelinquent sale, receives revenues with a present value of $1,200 and incurs costs with a value of $1,000. Cast Iron has been asked to extend credit to a new customer. You can find little information on the firm but you believe that the probability of payment is no better than .8 and that there will be a repeat order in one year if payment occurs. If the discount rate is 20%, calculate the minimum probability of payment on the repeat order at which credit can be extended. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Minimum probability %

Reference no: EM132032119

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