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.
| a. |
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.) |
| Expected profit | $ |
| b. | Should you accept the order? | ||||
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