A firm is evaluating a $100,000 sales opportunity from a new customer. The customer is expected...

  

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A firm is evaluating a $100,000 sales opportunity from a new customer. The customer is expected to mirror the firms historical collection experience, as follows: S - EXP(S) 1 + ICP NPV- m COLLECTION PERIODO De 62-75 - 76-50 NPV of C VCR(S) ( DIO 10 H 13 115 00 PAYMENT PROBABUTY APN LON 24 2006 141 (5) COLLECTION COLECTION CASH CONTE FLOW $4,500 $10.000 $7,500 541,300 187,300 $5,000 190,000 S PVP of Colu ( 14:41 SIAS $15,2921 15140445 3 Expected PV Kolm (3) $12.700 SAM SES/AL SIMIL The purpose of this analysis is: To consider the weighted average of the possible outcomes based on the firms historical collection experience for a proposed new customer sale To consider over-arching changes to a firm's credit policy to affect sales, improve the quality of the AR, or some other firm objective Should trade credit be offered? Why? Yes, because NPV is positive No, because there is a 5% chance that the sale will lose a lot of money A firm is evaluating a $100,000 sales opportunity from a new customer. The customer is expected to mirror the firms historical collection experience, as follows: S - EXP(S) 1 + ICP NPV- m COLLECTION PERIODO De 62-75 - 76-50 NPV of C VCR(S) ( DIO 10 H 13 115 00 PAYMENT PROBABUTY APN LON 24 2006 141 (5) COLLECTION COLECTION CASH CONTE FLOW $4,500 $10.000 $7,500 541,300 187,300 $5,000 190,000 S PVP of Colu ( 14:41 SIAS $15,2921 15140445 3 Expected PV Kolm (3) $12.700 SAM SES/AL SIMIL The purpose of this analysis is: To consider the weighted average of the possible outcomes based on the firms historical collection experience for a proposed new customer sale To consider over-arching changes to a firm's credit policy to affect sales, improve the quality of the AR, or some other firm objective Should trade credit be offered? Why? Yes, because NPV is positive No, because there is a 5% chance that the sale will lose a lot of money

Answer rating: 100% (QA)

The purpose of this analysis is to consider the weighted average of the possible outcomes based on the firms historical collection experience for a pr... View the full answer