What is the default probability

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Reference no: EM131452784

Keep M Flying is a wholesaler that stocks engine components and test equipment for the commercial aircraft industry. A new customer has placed an order for eight high-bypass turbine engines, which increase fuel economy. The variable cost is $1.7 million per unit, and the credit price is $2.1 million each. credit is extend for one period. Based on historical experience, payment for about 1 out of every 240 such orders is never collected. The required return is 3.2 percent per period.

What is the default probability?

What is the NPV if this is a one-time order?

What is the NPV if this is repeat order?

Reference no: EM131452784

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