Evaluating credit policy, Solar Engines manufactures solar

Evaluating credit policy

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Reference no: EM131062830

Evaluating Credit Policy [LO2]

Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 185 units have been made by customers requesting credit. The variable cost is $11,600 per unit, and the credit price is $14,250 each. Credit is extended for one period. The required return is 1.9 percent per period. If Solar Engines extends credit, it expects that 30 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers will be one-time orders.

Calculate the NPV of the decision to grant credit. (Round your answer to 2 decimal places. (e.g., 32.16))

NPV=?

Reference no: EM131062830

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