A credit analyst has received a $500,000 order from a new customer. The cost of filling the
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- A credit analyst has received a $500,000 order from a new customer. The cost of filling the order (i.e., COGS) is $20,000 and collection costs are 1% of sales. The credit analyst notes that the COGS will be paid immediately. Further, it is assumed that the customer will repay the trade credit obligation in 90 days. It is also assumed that the collection costs will be incurred in 90 days. If the appropriate discount rate is 10%, the NPV of extending credit to the new customer is approximately what?
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
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