Cast Iron Company, on each nondelinquent sale, receives revenues with a present value of $1,210 and incurs
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Cast Iron Company, on each nondelinquent sale, receives revenues with a present value of $1,210 and incurs costs with a value of $1,005. Cast Iron has been asked to extend credit to a new customer. You can find little information on the firm but you believe that the probability of payment is no better than .80 and that there will be a repeat order in one year if payment occurs.
If the discount rate is 17%, calculate the minimum probability of payment on the repeat order at which credit can be extended. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Minimum probability ___________ %
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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