Question
In: Finance
Problem (10 marks) a) Zoey Enterprises manufactures solar engines for helicopters. Given the fuel savings available,...
Problem
a) Zoey Enterprises manufactures solar engines for helicopters. Given the fuel savings available, new orders for 125 units have been made by customers requesting credit. The variable cost is $11,400 per unit, and the credit price is $13,000 each. Credit is extended for one period. The required return is 1.9 percent per period. If Zoey Enterprises extends credit, it expects that 30 percent of the customers will be repeat customers and place the same order every period forever, and the remaining customers will place one-time orders. Should credit be extended?
b) Now, assume that the probability of default is 15 percent. Should the orders be filled now? Assume the number of repeat customers is affected by the defaults. In other words, 30 percent of the customers who do not default are expected to be repeat customers.
(Please provide all the equation and step by step or Excel.xml in google drive )
(Please don't copy from another places, the answer will upload to Turnitin)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Problem 6 (10 marks) a) Zoey Enterprises manufactures solar engines for helicopters. Given the fuel savings...
Problem 6
a) Zoey Enterprises manufactures solar engines for helicopters.
Given the fuel savings available, new orders for 125 units have
been made by customers requesting credit. The variable cost is
$11,400 per unit, and the credit price is $13,000 each. Credit is
extended for one period. The required return is 1.9 percent per
period. If Zoey Enterprises extends credit, it expects that 30
percent of the customers will be repeat customers and place the
same order every period forever,...
a) Zoey Enterprises manufactures solar engines for helicopters. Given the fuel savings available, new orders for...
a) Zoey Enterprises manufactures solar engines for helicopters.
Given the fuel savings available, new orders for 125 units have
been made by customers requesting credit. The variable cost is
$11,400 per unit, and the credit price is $13,000 each. Credit is
extended for one period. The required return is 1.9 percent per
period. If Zoey Enterprises extends credit, it expects that 30
percent of the customers will be repeat customers and place the
same order every period forever, and the...
please explain part b a) Zoey Enterprises manufactures solar engines for helicopters. Given the fuel savings...
please explain part b
a) Zoey Enterprises manufactures solar engines for helicopters.
Given the fuel savings available, new orders for 125 units have
been made by customers requesting credit. The variable cost is
$11,400 per unit, and the credit price is $13,000 each. Credit is
extended for one period. The required return is 1.9 percent per
period. If Zoey Enterprises extends credit, it expects that 30
percent of the customers will be repeat customers and place the
same order every...
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