The Default Rate of Don's New Customers Has Been Running

question 26

Multiple Choice

The default rate of Don's new customers has been running at 20%. The average sale for each new customer amounts to $500, generating a profit of $200 and a 30% chance of a repeat order next year. The default rate on repeat orders is only 5%. If the interest rate is 6%, what is the expected profit from each new customer?

• A) $152.50
• B) $149.53
• C) $275.00
• D) $100.00

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Definitions:

Post-colonial Theory

An intellectual discourse that analyzes, explains, and responds to the cultural legacy of colonialism and imperialism, focusing on the human consequences of the control and exploitation of colonized people and their lands.

South Americans

Inhabitants of South America, a continent rich in cultural diversity and geographical landmarks.

Exception Fallacy

A logical error that occurs when someone assumes that an exceptional case can represent the entirety of a situation, thereby making broad generalizations from a single, atypical instance.

Entire Group

All members or elements within a specified collection, category, or set without exception.