Silicon Wafers Inc., is debating whether or not to extend credit to a particular customer. Silicon's products, primarily used in the manufacture of semiconductors, currently sell for P1,140 per unit. The variable cost is P760 per unit. The order under consideration is for 15 units today; payment is promised in 30 days. Required: a. If there is a 20 percent chance of default, should Silicon fill the order? The required return is 2 percent per month. This is a one-time sale and the customer will not buy if credit is not extended. b. What is the break-even probability in (a)? C. In general terms, how do you think your answer to (a) will be affected if the customer will purchase the merchandise for cash if the credit is refused? The cash price is P1,090 per unit.

quick computing currently sells 7 million computer chips each year at a price of $12 per chip. It is about to introduce a new chip, and it forecasts annual sales of 22 million of these improved chips at a price of $15 each.  However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 1 million per year.  The old chips cost $6 each to manufacture, and the new ones will cost $10 each.  What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?

A holder of a 90-day bill with 40 days left to maturity and a face value of $ 100, 000 chooses to sell it into the market. If bills maturing in 40 days are currently yielding 1.75% per annum, what price will be obtained? (Assume there are 365 days in a year, and answers must be rounded to two decimal places) $ Please only use a plain number as your answer and don't insert a comma. For example, if you get 1000, please use 1000, and don't use 1,000.

Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.17 million per year. Your upfront setup costs to be ready to produce the part would be $8.17 million. Your discount rate for this contract is 8.3% a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm?