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Unformatted text preview: c. Cost of credit report $1.50 Output Area: a. Cash discount 5.33% Default probability 10.00% Since the default probability is greater than the cash discount, credit should not be granted. b. Due to the increase in both quantity sold and credit price when credit is granted, an additional incremental cost is incurred. Additional incremental cost $29,300 Breakeven credit price $77.32 c. NPV $(74,622.27) The reports should not be purchased and credit should not be granted....
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- Spring '11
- Sales, Credit card, credit score, Credit history, Credit rating, additional incremental cost