CHARTERED FINANCE ARAVIND - 09901366442 – 09902787224
WE PROVIDE CASE STUDY ANSWERS, ASSIGNMENT SOLUTIONS, PROJECT REPORTS AND THESIS a r a v i n d .b a n a k a r @ g m a i l . c o m ARAVIND - 09901366442 – 09902787224 CHARTERED FINANCE CASE STUDY : 1 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 $ 1.4 million per unit, and the credit price is $ 1.65 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 2.5 per cent per period. Q1) Assuming that this is a one time order, should it be filled? The customer will not buy if credit is not extended? Q2) What is the break-even probability of default in port (a)? Q3) Suppose that customer’s who do not default become repeat customers and place the sa...