What is the expected profit of granting credit

Assignment Help Financial Management

Reference no: EM131179940

On each nondelinquent sale Cast Iron receives revenues with a present value of $1,310 and incurs costs with a present value of $1,160. Assume there is no possibility of repeat orders and that the probability of successful collection from the customer is p = .95. a-1. What is the expected profit of granting credit? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected profit $ per sale a-2. Should Cast Iron grant or refuse credit? Grant Refuse b. What is the break-even probability of collection? (Enter your answer as a percent rounded to 1 decimal place.) Break-even probability %

Reference no: EM131179940

Questions Cloud

What rate would be set if the average cost on each service : Consider the initial base case utilization assumption. What rate would be set if the average cost on each service were reduced by 10 percent?

Determining the changes in art : For this week, answer all three of the following questions. Cite at least one example in your response for each question. You should reference your book to help you answer these questions. If you use additional sources, you must cite them. Your answ..

About the targeted weighted average cost of capital : Phil's Carvings, Inc. wants to have a weighted average cost of capital of 8.7 percent. The firm has an aftertax cost of debt of 5.3 percent and a cost of equity of 10.6 percent. What debt-equity ratio is needed for the firm to achieve their targeted ..

What is the cost of debt for the firm : A company has 10,000 6 percent, 10-year bonds outstanding, with a face value of $1,000, currently trading at 102 percent of face value. The bonds pay interest semiannually. What is the cost of debt for the firm?

What is the expected profit of granting credit : On each nondelinquent sale Cast Iron receives revenues with a present value of $1,310 and incurs costs with a present value of $1,160. Assume there is no possibility of repeat orders and that the probability of successful collection from the customer..

Find the equation relating for the cascaded rc network : Find the equation relating V1(t) and V2(t) for the cascaded RC network shown in figure.- obtain the transfer function for the system.

Development environment-programming language : To present your design, you can use any relevant development environment/programming language used our programs including Visual Studio, Eclipse, Visio, and/or an HTML-based UI.

What is the company pre-tax cost of debt : The Bet-r-Bilt Company has a 5-year bond outstanding with a 4.65 percent coupon. Interest payments are paid semi-annually. The face amount of the bond is $1,000. This bond is currently selling for 91 percent of its face value. What is the company's p..

Calculate the fluid viscosity of a plane couette flow : Considering a plane Couette flow, the gap between the plates is 1 mm. One plate is fixed and the other is moving at 10 cm/s. If the measured shear stress is 1.34 Pa, calculate the fluid viscosity?

User Account

All Pages