(Answered) Alex is new in town and has asked to establish credit with

Finance

Alex is new in town and has asked to establish credit with your firm. He would like to buy some equipment today at a cost of $2,495. Your variable cost for that equipment is $1,875 and your monthly interest rate is 1.3 percent. You believe that Alex could become a regular customer if you grant him 30 days credit. You also believe that the probability of default is only 3 percent. What is the net present value of this decision?

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