Question
In: Finance
Anderson Corporation has a customer who wants to purchase $100,000 of goods on credit. Anderson estimates...
Anderson Corporation has a customer who wants to purchase $100,000 of goods on credit. Anderson estimates that the customer has a 98% probability of paying the $100,000 in three months and a 2% probability of a complete default (paying no cash at all). Anderson assumes an investment of 80% of the amount, made at the time of the sale, and a required return of 10% APY. What is the NPV of extend ing the customer credit? (Enter your answer as a decimal accurate to two decimal places)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
When customer wants to purchase a goods, he/she will engage in a decision-making process. Please use...
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Milton Industries wants to purchase new equipment that has a quoted price of $1,000,000. Milton estimates...
Milton Industries wants to purchase new equipment that has a
quoted price of $1,000,000. Milton estimates an additional cost of
$95,000 will be needed today to have the equipment modified,
shipped, and installed. The purchase of this additional equipment
will require Milton to invest an estimated $65,000 in net working
capital upfront, and this investment should be recovered when
Milton sells the equipment. If purchased, the equipment will be
employed for a total of five years, and then sold for...
Milton Industries wants to purchase new equipment that has a quoted price of $1,000,000. Milton estimates...
Milton Industries wants to purchase new equipment that has a
quoted price of $1,000,000. Milton estimates an additional cost of
$95,000 will be needed today to have the equipment modified,
shipped, and installed. The purchase of this additional equipment
will require Milton to invest an estimated $65,000 in net working
capital upfront, and this investment should be recovered when
Milton sells the equipment. If purchased, the equipment will be
employed for a total of five years, and then sold for...
Milton Industries wants to purchase new equipment that has a quoted price of $1,000,000. Milton estimates...
Milton Industries wants to purchase new equipment that has a
quoted price of $1,000,000. Milton estimates an additional cost of
$95,000 will be needed today to have the equipment modified,
shipped, and installed. The purchase of this additional equipment
will require Milton to invest an estimated $65,000 in net working
capital upfront, and this investment should be recovered when
Milton sells the equipment. If purchased, the equipment will be
employed for a total of five years, and then sold for...
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Zillmann Company sells goods on credit and estimates bad debts as a percentage of Account receivable,...
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.The Company has three customers following are the
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Date of Sales
Account Receivables
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Nov-01,2017
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Dec-15,2017
$ 12,000
Blair
Sep-10,2017
$ 16,000
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Chase
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Required:
Which approach of recording bad...
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