Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available new orders for 105 units have been made by customers
requesting credit. The variable cost is $8400 per unit and the credit price is $10250 each. Credit is extended for one period. The required return is 1.2
percent per period. If Solar Engines extends credit it expects that 20 percent of the customers will be repeat customers and place the same order every period
forever and the remaining customers will be one-time orders.
Calculate the NPV of the decision to grant credit