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

Expert Solution


Related 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...
Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 105...
Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 105 units have been made by customers requesting credit. The variable cost is $8,400 per unit, and the credit price is $10,250 each. Credit is extended for one period. The required return is 1.2 percent per period and the probability of default is 15 percent. Assume the number of repeat customers is affected by the defaults. In other words, 30 percent of the customers who...
Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 140...
Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 140 units have been made by customers requesting credit. The variable cost is $9,800 per unit, and the credit price is $12,000 each. Credit is extended for one period. The required return is 1.9 percent per period. If Solar Engines extends credit, it expects that 15 percent of the customers will be repeat customers and place the same order every period forever and the remaining...
ESLA manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 105 units...
ESLA manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 105 units have been made by customers requesting credit. The variable cost is $8,400 per unit, and the credit price is $10,250 each. Credit is extended for one period. The required return is 1.2 percent per period. If TESLA extends credit, it expects that 20 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers will...
Here is the information about the solar energy system: Initial cost = $6,500; Initial fuel savings...
Here is the information about the solar energy system: Initial cost = $6,500; Initial fuel savings = $500/year; Expected life = 15 years; Value of Money = 10%; Inflation = 8%; and Incremental income tax rate = 25%. If we define the payback condition as the time required for the present worth of the accumulated benefit to equal the accumulated present worth of the system cost, what is the time required to reach the payback condition? Since the income tax...
Problem 1: [10 Marks] Given a generic array with ‘n’ items (not only integers). Give a...
Problem 1: [10 Marks] Given a generic array with ‘n’ items (not only integers). Give a solution for checking whether there are any duplicate elements in the array or not? You just need to return a boolean (true or false). State the complexity of your solution. Can you come up with another solution that has O(n logn) complexity? Explain. Problem 2: [10 Marks] Now consider the same problem as problem 1, but this time you only have positive integer numbers...
Exercise 10-3 Make or Buy a Component [LO10-3] Troy Engines, Ltd., manufactures a variety of engines...
Exercise 10-3 Make or Buy a Component [LO10-3] Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $24 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing...
Exercise 10-3 Make or Buy a Component [LO10-3] Troy Engines, Ltd., manufactures a variety of engines...
Exercise 10-3 Make or Buy a Component [LO10-3] Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $43 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT