The Default Rate of Demurrage Associates' New Customers Has Been

question 45

Multiple Choice

The default rate of Demurrage Associates' new customers has been running at 10%. The average sale for each new customer amounts to $800, generating a profit of $100 and a 40% chance of a repeat order next year. The default rate on repeat orders is only 2%. If the interest rate is 9%, what is the expected profit from each new customer?

• A) $88.70
• B) $47.75
• C) $43.25
• D) $50.83

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