Question

Sosin Inc. manufactures hydrogen engines. Recently 350 new orders placed by customers requesting credit. The variable cost is $16,000 per unit, and the credit price is $18,400 each. Credit is extended for one period, and based on historical experience, payments for 15% of the orders are never collected. The required return is 3% per period. Suppose that customers who don’t default become repeat customers and they never default. Calculate the NPV? ( If your answer is negative, use a negative (-) sign. Do not use a positive sign (+) for positive results. Omit the $ sign in your response. For example, an answer of $2.50 should be entered as 2.50)

Answer 1

Based on the given data, pls find below workings:

Steps and workings given below in the excel screenshot:

The answer is NPV is -285436.89