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Extending credit to the new customer

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Controller Kim Johnson is considering a $1,000 order from a new customer. The cost of filling the order is $950. Jan estimates collection costs are $20. The customer will pay in 60 days. If the appropriate cost of capital is 18%, what is the NPV of extending credit to the new customer?

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The solution explains how to calculate the NPV of extending credit to the new customer.

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The total amount collected in 60 days is 1,000-20=980
The value of the ...

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