16. X is equal to 37. Assume all sales are one-time credit sales with a probability...
16. X is equal to 37. Assume all sales are one-time credit sales with a probability of a collection of 96 percent. The variable cost per unit is $1.67, the sales price per unit is $4.99, and the monthly interest rate is 1+ x percent. What is the NPV of a credit sale of one extra unit?
A) $3.073 B) $3.026 C) $2.981 D) $2.936 E) $2.892
Homework Answers
Monthly interest rate = 37%/12 = 0.03083333333
Expected revenue = 4.99 * 0.96 = $4.7904
Profit = 4.7904 - 1.67 = $3.1204
NPV = Profit/(1 + r)
NPV = 3.1204/(1 + 0.03083333333)
NPV = 3.027065481
Option B is correct: $3.026
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