The Branding Iron Company sells its irons for $60 apiece wholesale. Production c

Question

The Branding Iron Company sells its irons for $60 apiece wholesale. Production cost is $50 per iron. There is a 20% chance that a prospective customer will go bankrupt within the next half-year. The customer orders 1,000 irons and asks for 6 months%u2019 credit. Assume an 10% per year discount rate, no chance of a repeat order, and that the customer will pay either in full or not at all.

Calculate the expected profit for the order. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Calculate the expected profit for the order. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Explanation / Answer

http://www.chegg.com/homework-help/credit-decision-branding-iron-company-sells-irons-60-apiece-chapter-20-problem-16pp-solution-9780078034640-exc

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