You also believe that the probability of default is only 3


Alex is new in town and has asked to establish credit with your firm. He would like to buy some equipment today at a cost of $2,495. Your variable cost for that equipment is $1,875 and your monthly interest rate is 1.3 percent. You believe that Alex could become a regular customer if you grant him 30 days credit. You also believe that the probability of default is only 3 percent. What is the net present value of this decision?

Solution Preview :

Prepared by a verified Expert
Finance Basics: You also believe that the probability of default is only 3
Reference No:- TGS02553092

Now Priced at $10 (50% Discount)

Recommended (90%)

Rated (4.3/5)