The Branding Iron Company sells its irons for $30 apiece wholesale. Production cost is $20 per...

The Branding Iron Company sells its irons for $30 apiece wholesale. Production cost is $20 per iron. There is a 35% chance that a prospective customer will go bankrupt within the next half-year. The customer orders 1,000 irons and asks for 6 months’ credit. Assume the discount rate is 7% per year, there is no chance of a repeat order, and the customer will either pay in full or not pay at all.

a. Calculate the expected profit for the order. (A negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Expected Profit?

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jeff jeffy answered 2 years ago

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