(Answered) Crisps has received an order fornbsp14500nbspbags of potato

Finance

Crisps has received an order for 14500 bags of potato chips from BigBag. Crisps views BigBag to be a long-term customer and believes they will continue to place the same order year after year forever. Crisps sells its large bags of potato chips for $2.25 each, and calculates its internal cost for the product at $0.95 each.

Market research estimates that there is a 37% chance that BigBag will pay in full what it owes. Crisps uses a discount rate of 6.45% for all NPV analysis.

Based on this information, calculate the NPV of this credit decision?

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