Crisps uses a discount rate of 605 for all npv analysis


Crisps has received an order for 12500 bags of potato chips from BigBag. Crisps views BigBag to be a long-term customer and believes they will continue to place the same order year after year forever. Crisps sells its large bags of potato chips for $2.05 each, and calculates its internal cost for the product at $0.75 each. Market research estimates that there is a 27% chance that BigBag will pay in full what it owes. Crisps uses a discount rate of 6.05% for all NPV analysis. Based on this information, calculate the NPV of this credit decision?

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Financial Management: Crisps uses a discount rate of 605 for all npv analysis
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