What is the npv of her credit decision if the credit terms

Assignment Help Financial Accounting

Reference no: EM133379891

Question: Michelle, the CFO of small scale packaging company, has to make a decision whether to approve a credit purchase request from a start-up company for packaging materials she normally sells on cash for $100,000. She decided to mark-up the sale by 10% based on her judgment on the risk of the firm. The firm's hurdle rate is 12%. The firm's variable cost rate is 70%. Michelle assumed a bad debt loss rate of 3% with an estimated collection cost of 3%. What is the NPV of her credit decision if the credit terms indicate Net 45 sale.

Reference no: EM133379891

Questions Cloud

Why do you think it is interesting : How is your article of choice related to topics above and why do you think it is interesting and What are the practical implications of this article

What were your 5 key learnings from this workshop : What were your 5 key learnings from this workshop? - What was your most surprising insight from the Customer Journey Mapping workshop?

Developing an effective tf financing case report : Your challenge is to divide the money among the members of your group based on both the quality and quantity of their work

Why would you purchase furnishings in such a manner : What aspects of the sites do you like and dislike, such as the appearance and feel, the navigation, and any particular features that you found helpful

What is the npv of her credit decision if the credit terms : Michelle assumed a bad debt loss rate of 3% with an estimated collection cost of 3%. What is the NPV of her credit decision if the credit terms indicate Net 45

What characteristics make shopping more challenging : Assume you want to purchase wireless speakers. compare wireless speakers on these two sites. Which website features did you find helpful? What characteristics

Uncollectible accounts expense reported on decmber : Assuming no other transaction happened, what is the adjusted balance of Allowance for Doubtful Accounts at December 31st

How consistent is accounting among companies : Why is accounting important? Who governs accounting? How consistent is accounting among companies in the same industry? Can show an example of where accounting

Premium on the office equipment in the amount : the inventory of supplies remaining on hand (unused) was $4,000. On June 1, 2021, a one-year insurance premium on the office equipment in the amount of $12,000

User Account

All Pages