Question 10 (5 points) A firm is evaluating a $50,000 sales opportunity (S) for a new customer. The Variable Cost Ratio (VCR) is 70% of sales. Collection Cots (EXP) are 3% of sales per CP beginning with second CP. After 90 days the invoice will be turned over to a collection agency that collects, on average, 50% of the invoice amount earning a 50% commission based on amount collected. The firm's cost of capital is 11% (1). What is the COLLECTION CASH FLOW for the 76-90 Days CP bucket if the new customer account performs similarly to existing customers? S-EXP(S)_ VCR(S) NPT = 1+1CP NPV Expected NPV DSO Payment Probability Collection Costs Collection Cash (EXP) Flow Collection Period (CP) $14,330.99 59,745.07 45 68% $0 $50,000 >90 Days Expected NPV of Credit Extension 100% $48,500 $45,500 $47,000 $24,472