Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives reveneues with a present value of $1,260 and incurs costs with a present value of $1,000. Cast Iron's costs have increased from $1,000 to $1,110. Assuming there's no probabililty of repeat ordes and that the probability of successful collection from the customer is p=0.95, A) What is the expected profit of granting credit? (don't round intermediate calculations. Round answer to 2 decimals) B) What is the break-even probability of collection?
Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives reveneues with a present value of $1,260 and incurs costs with a present value of $1,000. Cast Iron's costs have increased from $1,000 to $1,110. Assuming there's no probabililty of repeat ordes and that the probability of successful collection from the customer is p=0.95, A) What is the expected profit of granting credit? (don't round intermediate calculations. Round answer to 2 decimals) B) What is the break-even probability of collection?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives reveneues with a
A) What is the expected profit of granting credit? (don't round intermediate calculations. Round answer to 2 decimals)
B) What is the break-even probability of collection?
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