Evaluating credit policy [l02] air spares is a wholesaler that stocks engine components and test equipment for the commercial aircraft industry. a new customer has placed an order for eight high-bypass turbine engines, which increase fuel economy. the variable cost is 1.6 million per unit, and the credit price is 1.725 million each. credit is extended for one period, and based on historical experience, payment for about 1 out of every 200 such orders is never collected. the required return is 1.8 percent per period.

assuming that this is a one-time order, should it be filled? the customer will not buy if credit is not extended.

what is the break-even probability of default in part (a)?

suppose that customer who don’t default become repeat customers and place the same order every period forever. further assume that repeat customers never default. should the order be filled? what is the break-even probability of default?

describe in general terms why credit term will be more liberal when repeat orders are a possibility.

odd consecutive integers are odd integers that follow each other. they have a difference of 2 between every two numbers. if n is an odd integer, then n, n+2, n+4 and n+6 will be odd consecutive integers. the first number in the pattern is always the variable on its own or in this case, "n". examples.

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

answer; (c) communism and socialism;