Cast Iron Company, on each nondelinquent sale, receives revenues with a present value of $1,210 and incurs costs with a value of $1,005. Cast Iron has been asked to extend credit to a new customer. You can find little information on the firm but you believe that the probability of payment is no better than .80 and that there will be a repeat order in one year if payment occurs.

If the discount rate is 17%, calculate the minimum probability of payment on the repeat order at which credit can be extended. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Minimum probability ___________ %

Answer rating: 100% (QA)

Expected profit p x PVRev cost 1 pPVcost Minimum pro... View the full answer