Keep M Flying Is a Wholesaler That Stocks Engine Components

Keep M Flying 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 $1.7 million per unit,and the credit price is $2.1 million each.Credit is extended for one period.Based on historical experience,payment for about 1 out of every 240 such orders is never collected.The required return is 3.2 percent per period.What is the NPV per unit if this is a one-time order?

A) $316,407
B) $321,819
C) $326,405
D) $334,290
E) $351,056

Correct Answer:

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