Net present value of granting credit


The Salt Lake Ski Company wants to make a $200,000 credit purchase from your firm. Your investment in the credit sale is 70% of the amount of the sale. You estimate that Salt Lake has a 95% probability of paying you on time, which is in three months, and a 5% probability of paying nothing. If the opportunity cost of funds is 18% per year, what is the net present value of granting credit?

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Net present value of granting credit
Reference No:- TGS044217

Expected delivery within 24 Hours