Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives revenues...

Transcribed Image Text:

Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives revenues with a present value of $1,210 and incurs costs with a present value of $1,000. Cast Iron's costs have Increased from $1,000 to $1,060. Assuming that there is no possibility of repeat orders and that the probability of successful collection from the customer is p = 0.96, answer the following. a-1. What is the expected profit of granting credit? Note: Negative amount should be Indicated by a minus sign. Do not round Intermediate calculations. Round your answer to 1 decimal place. a-2. Should Cast Iron grant or refuse credit? b. What is the break-even probability of collection? Note: Enter your answer as a percent rounded to 1 decimal place. a-1. Expected profit a-2. Should Cast Iron grant or refuse credit? b. Break-even probability per sale % Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives revenues with a present value of $1,210 and incurs costs with a present value of $1,000. Cast Iron's costs have Increased from $1,000 to $1,060. Assuming that there is no possibility of repeat orders and that the probability of successful collection from the customer is p = 0.96, answer the following. a-1. What is the expected profit of granting credit? Note: Negative amount should be Indicated by a minus sign. Do not round Intermediate calculations. Round your answer to 1 decimal place. a-2. Should Cast Iron grant or refuse credit? b. What is the break-even probability of collection? Note: Enter your answer as a percent rounded to 1 decimal place. a-1. Expected profit a-2. Should Cast Iron grant or refuse credit? b. Break-even probability per sale %