Problem:
The Branding Iron Company sells its irons for $50 a piece wholesale. Production cost is $40 per iron. There is a 25% chance that wholesaler Q will go bankrupt within the next year. Q orders 1000 irons and asks for six months' credit. Assume that the discount rate is 10% per year, there is no chance of a repeat order, and Q will pay either in full or not at all.
Required:
Calculate the NPV of the order.
Explain in detail