Saxon Corporation sells a product for $48 with costs of $33 per unit. Saxon uses a 9% rate of return for all its calculations. The CFO estimates that there is a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months. Customer wishes to place an order for 1,000 units of the product. Multiple Choice О Extend credit; total benefit of $3,780 Extend credit; total benefit of $3,880 Extend credit; total benefit of $3,980 Extend credit; total benefit of $4,080

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 10MC
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Saxon Corporation sells a product for $48 with costs of $33 per unit. Saxon uses a 9% rate of return for all its calculations. The CFO estimates that there
is a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months. Customer wishes to place an order for
1,000 units of the product.
Multiple Choice
О
Extend credit; total benefit of $3,780
Extend credit; total benefit of $3,880
Extend credit; total benefit of $3,980
Extend credit; total benefit of $4,080
Transcribed Image Text:Saxon Corporation sells a product for $48 with costs of $33 per unit. Saxon uses a 9% rate of return for all its calculations. The CFO estimates that there is a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months. Customer wishes to place an order for 1,000 units of the product. Multiple Choice О Extend credit; total benefit of $3,780 Extend credit; total benefit of $3,880 Extend credit; total benefit of $3,980 Extend credit; total benefit of $4,080
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