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Problem 31-18 Credit policy Cast Iron Company, on each nondelinquent sale, receives revenues with a...

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Accounting

Problem 31-18 Credit policy Cast Iron Company, on each nondelinquent sale, receives revenues with a present value of $1,270 and incurs costs with a value of $1,035. Cast Iron has been asked to extend credit to a new customer. You can find little information on the firm but you believe that the probability of payment is no better than 0.78 and that there will be a repeat order in one year if payment occurs. If the discount rate is 16%, calculate the minimum probability of payment on the repeat order at which credit can be extended.

a. minimum probability

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