The branding iron company sells its irons for 50 apiece, Ask an Expert

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The Branding Iron Company sells its irons for $50 apiece wholesale. Production cost is $40 per iron. There is a 25% chance that wholesaler Q will go bankrupt within the next year. Q orders 1,000 irons and asks for six months’ credit. Assume that the discount rate is 10% per year, there is no chance of a repeat order, and Q will pay either in full or not at all.

a. Calculate the NPV of the order. (A negative answer should be indicated by minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

NPV $

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92868769

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