chapter 20, question 3

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Liberty University *

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530

Subject

Business

Date

May 11, 2024

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pdf

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3

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Score: 20/20 Points 100 % 5/9/24, 8:39 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 1/3
3. Award: 5 out of 5.00 points Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives revenues with a present value of $1,240 and incurs costs with a present value of $1,000. Cast Iron’s costs have increased from $1,000 to $1,090. Assuming that there is no possibility of repeat orders and that the probability of successful collection from the customer is p = 0.96, answer the following. a-1. What is the expected profit of granting credit? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 1 decimal place. a-2. Should Cast Iron grant or refuse credit? b. What is the break-even probability of collection? Note: Enter your answer as a percent rounded to 1 decimal place. a-1. Expected profit 100.4 per sale a-2. Should Cast Iron grant or refuse credit? Grant b. Break-even probability 87.9 % Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives revenues with a present value of $1,240 and incurs costs with a present value of $1,000. Cast Iron’s costs have increased from $1,000 to $1,090. Assuming that there is no possibility of repeat orders and that the probability of successful collection from the customer is p = 0.96, answer the following. a-1. What is the expected profit of granting credit? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 1 decimal place. a-2. Should Cast Iron grant or refuse credit? b. What is the break-even probability of collection? Note: Enter your answer as a percent rounded to 1 decimal place. 5/9/24, 8:39 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 2/3
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