You Have the Opportunity to Make a One-Time Sale If

question 320

Multiple Choice

You have the opportunity to make a one-time sale if you will give a new customer 30 days to pay. You suspect that there is a 40 percent chance that this person will never pay you. The sales price of the item the customer wants to buy is $249. Your variable cost on that item is $174 and your monthly interest rate is 1.5 percent. Should you grant credit to this customer? Why or why not?

• A) Yes; because the net present value of the potential sale is $75.
• B) Yes; because the net present value of the potential sale is $249.
• C) No; because the net present value of the potential sale is -$27.
• D) No; because the net present value of the potential sale is -$174.
• E) It doesn't matter; because the NPV of the potential sale is zero.

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Definitions:

Graves Disease

An autoimmune disorder that causes the thyroid gland to produce too much thyroid hormone, leading to hyperthyroidism.

Hyposecretion

The condition of insufficient secretion of hormones or other substances from a gland.

Thyroid Hormone

Hormones produced by the thyroid gland, including triiodothyronine (T3) and thyroxine (T4), which regulate the body's metabolism, energy production, and nervous system development.

Melanocyte-Stimulating Hormone

A hormone involved in the regulation of melanin production in the skin, affecting skin pigmentation.