Engi Sola Corp. manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 125
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Question:
Engi Sola Corp. manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 125 units have been made by customers requesting credit. The variable cost is $9,700 per unit, and the credit price is $11,100 each. Credit is extended for one period. The required return is 1.9% per period. If Engi Sola extends credit, it expects that 30% of the customers will be repeat customers and place the same order every period forever, and the remaining customers will be one-time orders.
Calculate the NPV of the decision to grant credit.
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Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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