Chapter 20 Pre-Built Problems S Help Sa 9 10 points Surf City sells its network browsing software for $40 per copy to computer software distributors and allows its customers 1 month to pay their bils. The cost of the software is $25 per copy. The industry is very new and unsettled, however, and the probability that a new customer granted credit will go bankrupt within the next month is 15%. The firm is considering switching to a cash-on-delivery credit policy to reduce its exposure to defaults on trade credit. The discount rate is 2% per month. Required: a-1. What is the present value of the expected profit under the current credit policy? a-2. What is the expected profit under the cash-on-delivery policy? If the firm switches policies, sales will fall by 40% b-1. What would be the present value of the expected profit if a customer that is granted credit and pays its bills can be expected to generate repeat orders with negligible load of default for each of the next 6 months? Similarly, customers that pay cash also wil generate on average 6 months of repeat sales. b-2. What would be the present value of the expected profits under the cash-on delivery policy, given the sales information from (b. 112 back Prime Complete this question by entering your answers in the tabs below. Req A1 and A2 Raq B1 and 12 a-1. What is the present value of the expected proft under the current credit policy? (Do not round intermediate calculations. Round your answer to 2 decimal places. a-2. What is the expected profit under the cash-on-delivery policy? If the firm switches policies, sales will fall by 40%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Show less -1. Present value of expected pro Present value of expected prolt Raq A1 and A2 Req B1 and B2) Complete this question by entering your answers in the tabs below. Reg A1 and A2 rueq B1 and 2 b-1. What would be the present value of the expected profit ? a customer that is granted credit and pays its bills can be expected to generate repeat orders with negligible likelihood of default for each of the next 6 months? Similarly, customers that pay cash also will generate on average 6 months of repeat sales. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-2. What would be the present value of the expected profits under the cash-on-delivery policy, given the sales information from (b-17 (Do not round intermediate calculations. Round your answer to 2 decimal places.) Show less b-1. Present value of expected proft -2. Present value of expected proft